2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-008 - Noncompliance with Subrecipient Monitoring Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2019 - 2023
Award Numbers: DE-EE0009421, FA9550-21-1-0215, M19AC00015, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-008)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, UL Lafayette did not adequately monitor subrecipients of the Research and Development (R&D) Cluster Programs. In a non-statistical sample of seven subawards out of a population of 50 subawards, it was noted that for six (85.7%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For three (42.9%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the required risk analyses were performed to evaluate each subrecipients’ fraud risk and risk of noncompliance with federal regulations and the terms of the subaward. For two of the subrecipients reviewed (28.6%), UL Lafayette was unable to provide documentation that ensured each subrecipient obtained the required audit and that the audit was reviewed so that timely and appropriate action could be taken for any findings pertaining to the federal awards, as required by federal regulations. Additionally, for one (14.3%) of the subrecipients evaluated, the subaward documents did not contain the federal award date as required by federal regulations.
Criteria:
Per 2 CFR 200.332(b)(1)(iv), all pass-through entities must ensure that every subaward includes the federal award date.
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient's fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2 CFR 200.332(e)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
2 CFR 200.332(e)(2) and (3) require pass-through entities to issue a management decision on applicable audit findings, in accordance with 2 CFR 200.521, within six months after acceptance of the subrecipient’s audit report by the Federal Audit Clearinghouse, and ensure that the subrecipient takes timely and appropriate corrective action on all findings.
Per 2 CFR 200.332(g), pass-through entities are responsible for verifying that every subrecipient is audited as required by 2 CFR Part 200, subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in CFR 200.501 of $750,000 or more in federal awards during the subrecipient’s fiscal year.
Cause:
UL Lafayette did not have sufficient controls in place to adequately monitor subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that all required financial and performance reports are obtained and reviewed and that all required subrecipient audit reports are obtained and reviewed in order to evaluate the impact of any findings noted by the audit and issue management decision letters, if applicable. In addition, UL Lafayette should strengthen controls to ensure that required information is included in the subaward documents and that risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-64).
2024-009 – Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Executive Department – Division of Administration – Office of Community Development
Award Years: 2016, 2021, 2023
Award Numbers: B-16-DL-22-0001, B-21-DF-22-0001, B-21-DZ-22-0001, B-23-DC-22-0001
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Division of Administration, Office of Community Development – Local Government Assistance (OCD-LGA) and Office of Community Development-Disaster Recovery (OCD-DR) did not comply with Federal Funding Accountability and Transparency Act (FFATA) Reporting requirements for the Community Development Block Grant/State’s Program (CDBG). During fiscal year 2024, OCD-LGA approved 41 subawards totaling approximately $22 million to 40 different subrecipients, and OCD-DR approved 33 subawards totaling approximately $310.9 million to 32 different subrecipients. Our procedures identified the following:
• In a sample of eight OCD-LGA subawards, none of the eight subaward obligations were reported in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) until 39 to 62 days after the required time frame.
• Of the 10 OCD-DR subawards tested, four obligations reported in FSRS were not reported until 5 to 86 days after the required time frame.
See Schedule of Findings and Questioned Costs for chart/table.
Criteria:
2 CFR Part 170, Appendix A, requires the non-federal entity to report to FSRS each obligating action equal to or exceeding $30,000 for a subaward. In addition, the subaward information must be reported no later than the end of the month following the month in which the obligation was made. 2 CFR Part 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with relevant requirements.
Cause:
OCD-LGA management stated that they were unable to submit the reports in FSRS timely. OCD-DR management stated that the infrequency of preparation of the FFATA reports caused the required FFATA reports to be submitted untimely to FSRS. Both OCD-LGA and OCD-DR did not maintain adequate internal controls to ensure compliance with FFATA reporting requirements.
Effect:
Not complying with the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding OCD-LGA and OCD-DR’s administration of federal awards.
Recommendation:
OCD-LGA and OCD-DR management should ensure that established internal controls are operating to ensure compliance with FFATA reporting requirements, which includes the timely submission of information.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-6).
2024-008 - Noncompliance with Subrecipient Monitoring Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2019 - 2023
Award Numbers: DE-EE0009421, FA9550-21-1-0215, M19AC00015, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-008)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, UL Lafayette did not adequately monitor subrecipients of the Research and Development (R&D) Cluster Programs. In a non-statistical sample of seven subawards out of a population of 50 subawards, it was noted that for six (85.7%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For three (42.9%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the required risk analyses were performed to evaluate each subrecipients’ fraud risk and risk of noncompliance with federal regulations and the terms of the subaward. For two of the subrecipients reviewed (28.6%), UL Lafayette was unable to provide documentation that ensured each subrecipient obtained the required audit and that the audit was reviewed so that timely and appropriate action could be taken for any findings pertaining to the federal awards, as required by federal regulations. Additionally, for one (14.3%) of the subrecipients evaluated, the subaward documents did not contain the federal award date as required by federal regulations.
Criteria:
Per 2 CFR 200.332(b)(1)(iv), all pass-through entities must ensure that every subaward includes the federal award date.
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient's fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2 CFR 200.332(e)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
2 CFR 200.332(e)(2) and (3) require pass-through entities to issue a management decision on applicable audit findings, in accordance with 2 CFR 200.521, within six months after acceptance of the subrecipient’s audit report by the Federal Audit Clearinghouse, and ensure that the subrecipient takes timely and appropriate corrective action on all findings.
Per 2 CFR 200.332(g), pass-through entities are responsible for verifying that every subrecipient is audited as required by 2 CFR Part 200, subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in CFR 200.501 of $750,000 or more in federal awards during the subrecipient’s fiscal year.
Cause:
UL Lafayette did not have sufficient controls in place to adequately monitor subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that all required financial and performance reports are obtained and reviewed and that all required subrecipient audit reports are obtained and reviewed in order to evaluate the impact of any findings noted by the audit and issue management decision letters, if applicable. In addition, UL Lafayette should strengthen controls to ensure that required information is included in the subaward documents and that risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-64).
2024-010 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
State Entity: Louisiana Workforce Commission (LWC)
Award Years: 2021 - 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-012)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the Federal Audit Clearinghouse (FAC) and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs. LWC’s total WIOA expenditures during state fiscal year 2024 totaled more than $50 million, with approximately $40.7 million provided to subrecipients.
Our review of LWC’s monitoring of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• Three Single Audit reports were submitted to the FAC between 7 and 64 days after the deadline set by federal regulations.
• For an additional three Single Audit reports, each with findings affecting the WIOA cluster of programs, management decision letters were issued between 148 and 216 days after the deadline set by federal regulations.
Criteria:
2 CFR 200.512(a) requires that Single Audit reports be submitted within the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients.
2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the FAC.
Cause:
LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the FAC and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs.
Effect:
Failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted and required management decision letters are issued by the deadlines established in federal regulations impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor.
Recommendation:
LWC management should implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted to the FAC in a timely manner and required management decision letters are issued by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-50).
2024-011 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Louisiana Workforce Commission (LWC)
Award Year: 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-013)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, for Workforce Innovation and Opportunity Act (WIOA) Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS) website required for federal subawards by FFATA.
LWC had 15 subawards totaling $35.7 million executed in state fiscal year 2024. The data submissions for 11 of the 15 subawards occurred between one and two months after the due date specified by federal regulations. The 11 subawards submitted late each exceeded $30,000 and collectively totaled more than $25.2 million. In addition, LWC entered into the FSRS website an incorrect subaward amount for two subawards. The error resulted in an underreporting of the subawards totaling $79,207.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170, Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
The amount of the subaward is one of the key data elements identified by federal regulations for FFATA data submissions.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submission. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations and included erroneous amounts for two subawards.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late and erroneous data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-52).
2024-010 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
State Entity: Louisiana Workforce Commission (LWC)
Award Years: 2021 - 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-012)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the Federal Audit Clearinghouse (FAC) and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs. LWC’s total WIOA expenditures during state fiscal year 2024 totaled more than $50 million, with approximately $40.7 million provided to subrecipients.
Our review of LWC’s monitoring of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• Three Single Audit reports were submitted to the FAC between 7 and 64 days after the deadline set by federal regulations.
• For an additional three Single Audit reports, each with findings affecting the WIOA cluster of programs, management decision letters were issued between 148 and 216 days after the deadline set by federal regulations.
Criteria:
2 CFR 200.512(a) requires that Single Audit reports be submitted within the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients.
2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the FAC.
Cause:
LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the FAC and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs.
Effect:
Failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted and required management decision letters are issued by the deadlines established in federal regulations impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor.
Recommendation:
LWC management should implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted to the FAC in a timely manner and required management decision letters are issued by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-50).
2024-011 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Louisiana Workforce Commission (LWC)
Award Year: 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-013)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, for Workforce Innovation and Opportunity Act (WIOA) Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS) website required for federal subawards by FFATA.
LWC had 15 subawards totaling $35.7 million executed in state fiscal year 2024. The data submissions for 11 of the 15 subawards occurred between one and two months after the due date specified by federal regulations. The 11 subawards submitted late each exceeded $30,000 and collectively totaled more than $25.2 million. In addition, LWC entered into the FSRS website an incorrect subaward amount for two subawards. The error resulted in an underreporting of the subawards totaling $79,207.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170, Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
The amount of the subaward is one of the key data elements identified by federal regulations for FFATA data submissions.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submission. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations and included erroneous amounts for two subawards.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late and erroneous data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-52).
2024-010 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
State Entity: Louisiana Workforce Commission (LWC)
Award Years: 2021 - 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-012)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the Federal Audit Clearinghouse (FAC) and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs. LWC’s total WIOA expenditures during state fiscal year 2024 totaled more than $50 million, with approximately $40.7 million provided to subrecipients.
Our review of LWC’s monitoring of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• Three Single Audit reports were submitted to the FAC between 7 and 64 days after the deadline set by federal regulations.
• For an additional three Single Audit reports, each with findings affecting the WIOA cluster of programs, management decision letters were issued between 148 and 216 days after the deadline set by federal regulations.
Criteria:
2 CFR 200.512(a) requires that Single Audit reports be submitted within the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients.
2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the FAC.
Cause:
LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the FAC and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs.
Effect:
Failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted and required management decision letters are issued by the deadlines established in federal regulations impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor.
Recommendation:
LWC management should implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted to the FAC in a timely manner and required management decision letters are issued by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-50).
2024-011 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Louisiana Workforce Commission (LWC)
Award Year: 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-013)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, for Workforce Innovation and Opportunity Act (WIOA) Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS) website required for federal subawards by FFATA.
LWC had 15 subawards totaling $35.7 million executed in state fiscal year 2024. The data submissions for 11 of the 15 subawards occurred between one and two months after the due date specified by federal regulations. The 11 subawards submitted late each exceeded $30,000 and collectively totaled more than $25.2 million. In addition, LWC entered into the FSRS website an incorrect subaward amount for two subawards. The error resulted in an underreporting of the subawards totaling $79,207.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170, Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
The amount of the subaward is one of the key data elements identified by federal regulations for FFATA data submissions.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submission. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations and included erroneous amounts for two subawards.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late and erroneous data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-52).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024 -007 - Noncompliance with Period of Performance Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2021, 2022
Award Numbers: 80NSSC21M0165, DE-FE0031919
Compliance Requirement: Period of Performance
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
UL Lafayette did not ensure that all expenses charged to federal Research and Development (R&D) awards complied with the period of performance requirements.
From a population of 166 R&D grants with expenses totaling $6,720,454 and periods of performance starting or ending during the fiscal year ending June 30, 2024, a non-statistical sample of 17 grants was tested for compliance with period of performance requirements. For two (11.8%) of the 17 grants tested, expenses totaling $63,790 were identified as noncompliant with the period of performance requirements. One grant had expenses totaling $28,833 that were incurred after the period of performance. For the other grant, UL Lafayette failed to liquidate obligations totaling $34,957 incurred during the period of performance within 120 days after the end the period of performance as required by federal regulations.
Criteria:
A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance [2 CFR sections 200.308, 200.309, and 200.403(h)].
Additionally, 2 CFR 200.344 states that the recipient must liquidate all financial obligations incurred under the federal award no later than 120 calendar days after the conclusion of the period of performance.
Cause:
UL Lafayette did not have sufficient internal controls to ensure that only expenses incurred during the period of performance were charged to R&D grants and that obligations were liquidated timely.
Effect:
Noncompliance with the period of performance requirements resulted in $63,790 in questioned costs and increases the risk that expenses could be disallowed and not reimbursed by the awarding agency.
Recommendation:
Management should strengthen their procedures and internal controls that are in place to ensure that all expenses incurred on federal R&D grants comply with the period of performance requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-62).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2020, 2021, 2022
Award Numbers: 1R01MH125395, 2046460, R37AI094595
Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions
Pass-Through Entity: Northwestern University
Repeat Finding: Yes (Prior Year Finding No. 2023-007)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed.
From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-60).
2024-008 - Noncompliance with Subrecipient Monitoring Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2019 - 2023
Award Numbers: DE-EE0009421, FA9550-21-1-0215, M19AC00015, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-008)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, UL Lafayette did not adequately monitor subrecipients of the Research and Development (R&D) Cluster Programs. In a non-statistical sample of seven subawards out of a population of 50 subawards, it was noted that for six (85.7%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For three (42.9%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the required risk analyses were performed to evaluate each subrecipients’ fraud risk and risk of noncompliance with federal regulations and the terms of the subaward. For two of the subrecipients reviewed (28.6%), UL Lafayette was unable to provide documentation that ensured each subrecipient obtained the required audit and that the audit was reviewed so that timely and appropriate action could be taken for any findings pertaining to the federal awards, as required by federal regulations. Additionally, for one (14.3%) of the subrecipients evaluated, the subaward documents did not contain the federal award date as required by federal regulations.
Criteria:
Per 2 CFR 200.332(b)(1)(iv), all pass-through entities must ensure that every subaward includes the federal award date.
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient's fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2 CFR 200.332(e)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
2 CFR 200.332(e)(2) and (3) require pass-through entities to issue a management decision on applicable audit findings, in accordance with 2 CFR 200.521, within six months after acceptance of the subrecipient’s audit report by the Federal Audit Clearinghouse, and ensure that the subrecipient takes timely and appropriate corrective action on all findings.
Per 2 CFR 200.332(g), pass-through entities are responsible for verifying that every subrecipient is audited as required by 2 CFR Part 200, subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in CFR 200.501 of $750,000 or more in federal awards during the subrecipient’s fiscal year.
Cause:
UL Lafayette did not have sufficient controls in place to adequately monitor subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that all required financial and performance reports are obtained and reviewed and that all required subrecipient audit reports are obtained and reviewed in order to evaluate the impact of any findings noted by the audit and issue management decision letters, if applicable. In addition, UL Lafayette should strengthen controls to ensure that required information is included in the subaward documents and that risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-64).
2024-008 - Noncompliance with Subrecipient Monitoring Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2019 - 2023
Award Numbers: DE-EE0009421, FA9550-21-1-0215, M19AC00015, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-008)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, UL Lafayette did not adequately monitor subrecipients of the Research and Development (R&D) Cluster Programs. In a non-statistical sample of seven subawards out of a population of 50 subawards, it was noted that for six (85.7%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For three (42.9%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the required risk analyses were performed to evaluate each subrecipients’ fraud risk and risk of noncompliance with federal regulations and the terms of the subaward. For two of the subrecipients reviewed (28.6%), UL Lafayette was unable to provide documentation that ensured each subrecipient obtained the required audit and that the audit was reviewed so that timely and appropriate action could be taken for any findings pertaining to the federal awards, as required by federal regulations. Additionally, for one (14.3%) of the subrecipients evaluated, the subaward documents did not contain the federal award date as required by federal regulations.
Criteria:
Per 2 CFR 200.332(b)(1)(iv), all pass-through entities must ensure that every subaward includes the federal award date.
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient's fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2 CFR 200.332(e)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
2 CFR 200.332(e)(2) and (3) require pass-through entities to issue a management decision on applicable audit findings, in accordance with 2 CFR 200.521, within six months after acceptance of the subrecipient’s audit report by the Federal Audit Clearinghouse, and ensure that the subrecipient takes timely and appropriate corrective action on all findings.
Per 2 CFR 200.332(g), pass-through entities are responsible for verifying that every subrecipient is audited as required by 2 CFR Part 200, subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in CFR 200.501 of $750,000 or more in federal awards during the subrecipient’s fiscal year.
Cause:
UL Lafayette did not have sufficient controls in place to adequately monitor subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that all required financial and performance reports are obtained and reviewed and that all required subrecipient audit reports are obtained and reviewed in order to evaluate the impact of any findings noted by the audit and issue management decision letters, if applicable. In addition, UL Lafayette should strengthen controls to ensure that required information is included in the subaward documents and that risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-64).
2024 -007 - Noncompliance with Period of Performance Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2021, 2022
Award Numbers: 80NSSC21M0165, DE-FE0031919
Compliance Requirement: Period of Performance
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
UL Lafayette did not ensure that all expenses charged to federal Research and Development (R&D) awards complied with the period of performance requirements.
From a population of 166 R&D grants with expenses totaling $6,720,454 and periods of performance starting or ending during the fiscal year ending June 30, 2024, a non-statistical sample of 17 grants was tested for compliance with period of performance requirements. For two (11.8%) of the 17 grants tested, expenses totaling $63,790 were identified as noncompliant with the period of performance requirements. One grant had expenses totaling $28,833 that were incurred after the period of performance. For the other grant, UL Lafayette failed to liquidate obligations totaling $34,957 incurred during the period of performance within 120 days after the end the period of performance as required by federal regulations.
Criteria:
A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance [2 CFR sections 200.308, 200.309, and 200.403(h)].
Additionally, 2 CFR 200.344 states that the recipient must liquidate all financial obligations incurred under the federal award no later than 120 calendar days after the conclusion of the period of performance.
Cause:
UL Lafayette did not have sufficient internal controls to ensure that only expenses incurred during the period of performance were charged to R&D grants and that obligations were liquidated timely.
Effect:
Noncompliance with the period of performance requirements resulted in $63,790 in questioned costs and increases the risk that expenses could be disallowed and not reimbursed by the awarding agency.
Recommendation:
Management should strengthen their procedures and internal controls that are in place to ensure that all expenses incurred on federal R&D grants comply with the period of performance requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-62).
2024-012 – Failure to Return Title IV Funds in Required Time Frames
State Entity: Louisiana State University at Shreveport (LSU-S)
Award Years: 2015 - 2024
Award Numbers: P063P191517, P063P201517, P063P211517, P063P221517, P063P231517, P268K201517, P268K211517, P268K221517, P268K231517, P268K241517
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
Louisiana State University at Shreveport (LSU-S) failed to return Title IV funds to the U.S. Department of Education (USDOE) within the required timeframes. In January 2025, management identified $101,159 of outstanding checks to students or parents, issued from September 2014 to May 2024, that were not returned to the USDOE as required by federal regulations.
Criteria:
Per 34 CFR 668.164(l):
(1) Notwithstanding any state law (such as a law that allows funds to escheat to the state), an institution must return to the Secretary any Title IV, Health Education Act program funds, except Federal Work Study (FWS) program funds, that it attempts to disburse directly to a student or parent that are not received by the student or parent. For FWS program funds, the institution is required to return only the federal portion of the payroll disbursement.
(2) If an electronic funds transfer (EFT) to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the secretary before the end of this 45-day period.
(3) If a check sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the secretary no later than 240 days after the date it issued the check.
Cause:
Management represented that their practice is to follow-up with the student or parent and encourage them to deposit their checks, but there are no procedures in place to follow-up and ensure the funds are returned to the USDOE within the required timeframe.
Effect:
Failure to timely return Title IV funds to the USDOE results in noncompliance with federal regulations and could result in disallowed costs.
Recommendation:
Management should develop and implement a process to return all Title IV funds that are not received by a student or parent to the USDOE within the required timeframes set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-39).
2024-013 – Noncompliance with Gramm-Leach-Bliley Act Regarding Student Information Security
State Entity: Louisiana State University at Shreveport (LSU-S)
Award Years: 2023, 2024
Award Numbers: P063P221517, P063P231517, P268K231517, P268K241517
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
LSU-S did not develop, implement, and maintain a comprehensive information security program to address the minimum requirements of the Gramm-Leach-Bliley Act standards for safeguarding student information.
Criteria:
The Gramm-Leach-Bliley Act (Pub. L. No. 106-102) requires institutions that participate in Title IV Educational Assistance Programs to safeguard customers’ sensitive data in accordance with 16 CFR 314.
16 CFR 314.3 requires institutions to develop, implement, and maintain a comprehensive information security program that contains administrative, technical, and physical safeguards that are appropriate for the university. The information security program should include certain elements required by federal regulations reasonably designed to:
• insure the security and confidentiality of customer information;
• protect against any anticipated threats or hazards to the security or integrity of such information; and
• protect against unauthorized access of such information that could result in substantial harm or inconvenience to any customer.
Cause:
Management represents that it has prepared a draft information security program policy statement but acknowledges that the policies have not been finalized or implemented.
Effect:
Failure to meet the minimum requirements of the Gramm-Leach-Bliley Act increases the risk of unauthorized disclosure, misuse, alteration, destruction or other compromise of student information and results in noncompliance with federal regulations.
Recommendation:
Management should develop, implement, and maintain an information security program to insure the security and confidentiality of student information and to protect against any anticipated threats or hazards to the security or integrity of such information.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-40).
2024-016 - Control Weakness over and Noncompliance with Enrollment Reporting
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
Southern University at Baton Rouge (SUBR) did not ensure changes in enrollment status for students who received Federal Pell Grant Program funds and/or Federal Direct Student Loans were accurately and timely reported to the National Student Loan Data System (NSLDS), as required by federal regulations.
In a non-statistical sample of 60 students tested for changes in enrollment status from a population of 1,124 students, the following was identified:
• 17 (28%) students had incorrect enrollment information. Six students had an NSLDS program length that did not agree to the SUBR catalog, and 11 students had incorrect enrollment statuses reported.
• 27 (45%) students did not have their enrollment changes correctly updated within 60 days.
Criteria:
34 CFR 685.309(b)(2), related to Federal Direct Student Loans, requires, unless it expects to submit its next updated enrollment report to the U.S. Department of Education (USDOE) within the next 60 days, a school must notify the USDOE within 30 days after the date the school discovers that a loan under Title IV of the Act was made to or on behalf of a student who was enrolled or accepted for enrollment at the school, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended.
34 CFR 690.83(b)(2), related to the Federal Pell Grant Program, requires an institution to submit, in accordance with deadline dates established by the USDOE through publication in the Federal Register, other reports and information the USDOE requires and to comply with the procedures the USDOE finds necessary to ensure that the reports are correct. The section titled Deadline Dates for Enrollment Reporting by Institutions in the Federal Register (88 FR 41092) refers to the NSLDS Enrollment Reporting Guide. The NSLDS Enrollment Reporting Guide, section 1.4, requires the institution to certify enrollment every 60 days.
Cause:
SUBR did not have proper controls in place to ensure changes in enrollment status for students who received Federal Pell Grant Program funds and Federal Direct Student Loan funds were accurately and timely reported to NSLDS. In addition, when SUBR attempted to submit the enrollment report, there was a file structure error preventing the data from being submitted timely.
Effect:
Inaccurate and untimely reporting of changes in enrollment status could impact the student’s Pell Grant or student loan eligibility and result in noncompliance with federal regulations. For students moving into repayment, reporting of changes in enrollment status affects when the grace period begins and how soon a student must begin repaying loan funds.
Recommendation:
Management should strengthen its procedures over changes in enrollment status for students receiving Federal Pell Grant Program funds and Federal Direct Student Loans to ensure SUBR reports accurate and timely information to NSLDS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-54).
2024-017 - Control Weakness over and Noncompliance with Return of Title IV Funds
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
SUBR did not have adequate controls in place to ensure that the return of Title IV funds were properly calculated and returned to the U.S. Department of Education (USDOE) as required by federal regulations. In addition, post-withdrawal disbursement requirements for Title IV funds were not followed.
In a non-statistical sample of 60 students for the Fall 2023 and Spring 2024 semesters, from a population of 456 students who received Title IV funding and ceased attendance or never began attendance, the following was noted:
• For 16 students (27%), SUBR did not perform a return of Title IV funds calculation because the students were incorrectly identified as enrolled rather than unofficially withdrawn, which resulted in $39,183 of Title IV funds not being returned to the USDOE.
• For two students (3%), SUBR used incorrect withdrawal dates in the return of Title IV calculation, which resulted in one of the students requiring a Title IV return of $372.
• For three students (5%), SUBR did not follow the requirements for post-withdrawal disbursements of grant funds by not providing timely notification of the post-withdrawal disbursement to the student or parent.
Criteria:
34 CFR 668.22(a)(1) requires the institution to determine the amount of Title IV funds that the student earned as of the student’s withdrawal date. 34 CFR 668.22(e)(4) requires the institution to calculate the amount of unearned Title IV assistance to be returned. 34 CFR 668.22(j) requires the institution to return unearned Title IV funds within 45 days of the determination date of withdrawal, and to determine the date of withdrawal within 30 days after the end of the period of enrollment.
Per 34 CFR 668.22(a)(6)(iii)(A), for post withdrawal disbursements, a written notification must be provided to the student or parent within 30 days of the date of the institution’s determination that the student withdrew.
34 CFR 668.22(e)(2) the percentage of Title IV funds earned by the student is equal to the percentage of the period of enrollment that the student completed if this date occurs on or before completion of 60 percent of the period of enrollment.
Cause:
SUBR did not follow its procedures to unofficially withdraw students who stopped attending classes prior to completing 60% of the semester. Also, instructors entered conflicting information for students’ final grade and/or students’ last day of attendance. In addition, federal guidelines were not followed when making a post withdrawal disbursement.
Effect:
Failure to return Title IV funds, prepare accurate calculations, and follow requirements related to post withdrawal disbursements resulted in noncompliance with federal regulations and increases the risk that federal funds will be required to be returned to the federal grantor. Audit procedures identified $39,555 that SUBR did not return to the USDOE, which are considered questioned costs.
Recommendation:
Management should strengthen controls to ensure that funds are returned timely to the USDOE, ensure that all return of Title IV funds calculations are performed accurately, and federal guidance for post withdrawal disbursements is followed. In addition, management should ensure instructors submit accurate grade and attendance information in order to determine a student’s correct enrollment status and last day of attendance.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-56).
2024-018 - Inadequate Internal Controls and Noncompliance with Cash Management Requirements
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Cash Management
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
SUBR did not comply with federal regulations regarding the timely return of excess Title IV funds. In our audit procedures for the fiscal year ended June 30, 2024, we noted SUBR overdrew $9.7 million in Federal Direct Student Loan funds on September 18, 2023, as the amount drawn exceeded what was needed for immediate loan disbursements to students. However, total Title IV funds were not overdrawn as there was also an under draw of the Federal Pell Grant Program (Pell). The overdraw on September 18, 2023, did not cause SUBR to have excess cash until Pell funds were drawn on September 29, 2023. Federal regulations consider an institution to have excess cash if those funds are not distributed within three business days of the draw. At the end of the third business day subsequent to the draw on September 29, 2023, SUBR had excess cash of approximately $2 million in Title IV funding. The excess cash was later detected by SUBR and refunded to the U.S. Department of Education (USDOE) on November 4, 2023; therefore, no questioned costs existed at fiscal year-end.
Criteria:
Per 34 CFR 668.162(b), under the advance payment method, an institution submits a request for funds to the USDOE. The institution’s request may not exceed the amount of funds the institution needs immediately for disbursements the institution has made or will make to eligible students and parents.
Per 34 CFR 668.166(a), USDOE considers excess cash to be any amount of Title IV program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution received those funds from the USDOE.
Cause:
Due to a weakness in internal controls over drawdowns of Title IV funds, SUBR drew funds from Federal Direct Student Loans on September 18, 2023, but a portion of these funds should have been drawn from the Federal Pell Grant Program. Although SUBR has a reconciliation process, it is not suitably designed to timely detect overdraws for Title IV programs.
Effect:
Failure to implement sufficient controls over cash management requirements resulted in an overdraw of Title IV funds and noncompliance with cash management regulations.
Recommendation:
Management should strengthen its procedures over the drawing of Title IV funds to ensure timely compliance with federal cash management requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-58).
2024-012 – Failure to Return Title IV Funds in Required Time Frames
State Entity: Louisiana State University at Shreveport (LSU-S)
Award Years: 2015 - 2024
Award Numbers: P063P191517, P063P201517, P063P211517, P063P221517, P063P231517, P268K201517, P268K211517, P268K221517, P268K231517, P268K241517
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
Louisiana State University at Shreveport (LSU-S) failed to return Title IV funds to the U.S. Department of Education (USDOE) within the required timeframes. In January 2025, management identified $101,159 of outstanding checks to students or parents, issued from September 2014 to May 2024, that were not returned to the USDOE as required by federal regulations.
Criteria:
Per 34 CFR 668.164(l):
(1) Notwithstanding any state law (such as a law that allows funds to escheat to the state), an institution must return to the Secretary any Title IV, Health Education Act program funds, except Federal Work Study (FWS) program funds, that it attempts to disburse directly to a student or parent that are not received by the student or parent. For FWS program funds, the institution is required to return only the federal portion of the payroll disbursement.
(2) If an electronic funds transfer (EFT) to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the secretary before the end of this 45-day period.
(3) If a check sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the secretary no later than 240 days after the date it issued the check.
Cause:
Management represented that their practice is to follow-up with the student or parent and encourage them to deposit their checks, but there are no procedures in place to follow-up and ensure the funds are returned to the USDOE within the required timeframe.
Effect:
Failure to timely return Title IV funds to the USDOE results in noncompliance with federal regulations and could result in disallowed costs.
Recommendation:
Management should develop and implement a process to return all Title IV funds that are not received by a student or parent to the USDOE within the required timeframes set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-39).
2024-013 – Noncompliance with Gramm-Leach-Bliley Act Regarding Student Information Security
State Entity: Louisiana State University at Shreveport (LSU-S)
Award Years: 2023, 2024
Award Numbers: P063P221517, P063P231517, P268K231517, P268K241517
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
LSU-S did not develop, implement, and maintain a comprehensive information security program to address the minimum requirements of the Gramm-Leach-Bliley Act standards for safeguarding student information.
Criteria:
The Gramm-Leach-Bliley Act (Pub. L. No. 106-102) requires institutions that participate in Title IV Educational Assistance Programs to safeguard customers’ sensitive data in accordance with 16 CFR 314.
16 CFR 314.3 requires institutions to develop, implement, and maintain a comprehensive information security program that contains administrative, technical, and physical safeguards that are appropriate for the university. The information security program should include certain elements required by federal regulations reasonably designed to:
• insure the security and confidentiality of customer information;
• protect against any anticipated threats or hazards to the security or integrity of such information; and
• protect against unauthorized access of such information that could result in substantial harm or inconvenience to any customer.
Cause:
Management represents that it has prepared a draft information security program policy statement but acknowledges that the policies have not been finalized or implemented.
Effect:
Failure to meet the minimum requirements of the Gramm-Leach-Bliley Act increases the risk of unauthorized disclosure, misuse, alteration, destruction or other compromise of student information and results in noncompliance with federal regulations.
Recommendation:
Management should develop, implement, and maintain an information security program to insure the security and confidentiality of student information and to protect against any anticipated threats or hazards to the security or integrity of such information.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-40).
2024-014 - Control Weakness over Direct Loans Monthly Reconciliations
State Entity: Louisiana State University Health Sciences Center – New Orleans (LSUHSC-NO)
Award Year: 2024
Award Number: P268K241518
Compliance Requirement: Cash Management
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
Louisiana State University Health Sciences Center – New Orleans (LSUHSC-NO) did not timely reconcile the U.S. Department of Education’s (USDOE) loan information to the institution’s financial records on a monthly basis for the Federal Direct Student Loans program. Each month, USDOE’s Common Origination and Disbursement (COD) system provides the institution the School Account Statement data files, which should reconcile back to USDOE’s grants management system (G5 system) Draw Down reports and the institution’s financial records to ensure the institution has transmitted accurate and complete student data to the COD system for all Federal Direct Student Loan borrowers in accordance with federal requirements.
During fiscal year 2024, audit procedures revealed that three of 12 (25%) monthly direct loan reconciliations were not completed timely, ranging from 29 to 91 days past the end of the next month. In addition, five of 12 (42%) were not reviewed timely, ranging from 14 to 155 days after the end of the next month.
Criteria:
34 CFR 685.300(b)(5) requires that schools must, on a monthly basis, reconcile institutional records with Federal Direct Student Loan funds received and disbursement records submitted to and accepted by the USDOE.
Per the 2023-2024 Federal Student Financial Aid Handbook (Vol. 4, Ch. 6), a school that participates in the Federal Direct Student Loan Program is required monthly to reconcile cash (funds it received from the G5 system to pay its students) with disbursements (actual disbursement records) it submitted to the COD system.
Cause:
LSUHSC-NO did not have adequate controls in place to ensure timely preparation and review of monthly Direct Loan reconciliations.
Effect:
Failure to perform the monthly reconciliations timely could result in LSUHSC-NO reporting inaccurate information to the COD system and place LSUHSC-NO in noncompliance with Direct Loan federal regulations. In addition, failure to reconcile to the G5 system could affect the overall cash management controls.
Recommendation:
Management should strengthen its controls to ensure LSUHSC-NO timely prepares and reviews monthly reconciliations of the institution’s financial and business records to the G5 and COD systems.
Management’s Response and Corrective Action Plan:
Management concurred in part and provided a corrective action plan (B-41).
2024-015 - Inaccurate Reporting of Student Enrollment Status
State Entity: Louisiana State University Health Sciences Center – New Orleans (LSUHSC-NO)
Award Year: 2024
Award Number: P268K241518
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
LSUHSC-NO did not ensure changes in enrollment status for students who received Federal Direct Student Loans were accurately and timely reported to the National Student Loan Data System (NSLDS), as required by federal regulations.
In a non-statistical sample of 60 students tested for changes in enrollment from a population of 671 students with changes in enrollment status, we noted the following:
• Six (10%) students had inaccurate enrollment statuses reported in the NSLDS, and
• Seven (12%) students’ enrollment status changes were not reported timely, ranging from 29 to 107 days late.
Criteria:
34 CFR 685.309 requires, unless an institution expects to submit its next updated enrollment report to the U.S. Department of Education (USDOE) within the next 60 days, a school must notify the USDOE within 30 days after the school discovers that a loan under Title IV was made to or on behalf of a student who was enrolled or accepted for enrollment at the school, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended.
Cause:
LSUHSC-NO did not have proper controls in place to ensure changes in enrollment status for students who received Federal Direct Student Loans were accurately and timely reported to NSLDS.
Effect:
Inaccurate and untimely reporting of changes in enrollment status could impact the student’s financial aid eligibility and result in either the advance or delay of a student’s grace period or obligation to begin or resume making scheduled loan payments, which could impair the federal government’s ability to recoup loan funds from the student and results in noncompliance with federal regulations.
Recommendation:
Management should strengthen its procedures over changes in enrollment status for students receiving Federal Direct Student Loans and report accurate and timely information to NSLDS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-43).
2024-016 - Control Weakness over and Noncompliance with Enrollment Reporting
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
Southern University at Baton Rouge (SUBR) did not ensure changes in enrollment status for students who received Federal Pell Grant Program funds and/or Federal Direct Student Loans were accurately and timely reported to the National Student Loan Data System (NSLDS), as required by federal regulations.
In a non-statistical sample of 60 students tested for changes in enrollment status from a population of 1,124 students, the following was identified:
• 17 (28%) students had incorrect enrollment information. Six students had an NSLDS program length that did not agree to the SUBR catalog, and 11 students had incorrect enrollment statuses reported.
• 27 (45%) students did not have their enrollment changes correctly updated within 60 days.
Criteria:
34 CFR 685.309(b)(2), related to Federal Direct Student Loans, requires, unless it expects to submit its next updated enrollment report to the U.S. Department of Education (USDOE) within the next 60 days, a school must notify the USDOE within 30 days after the date the school discovers that a loan under Title IV of the Act was made to or on behalf of a student who was enrolled or accepted for enrollment at the school, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended.
34 CFR 690.83(b)(2), related to the Federal Pell Grant Program, requires an institution to submit, in accordance with deadline dates established by the USDOE through publication in the Federal Register, other reports and information the USDOE requires and to comply with the procedures the USDOE finds necessary to ensure that the reports are correct. The section titled Deadline Dates for Enrollment Reporting by Institutions in the Federal Register (88 FR 41092) refers to the NSLDS Enrollment Reporting Guide. The NSLDS Enrollment Reporting Guide, section 1.4, requires the institution to certify enrollment every 60 days.
Cause:
SUBR did not have proper controls in place to ensure changes in enrollment status for students who received Federal Pell Grant Program funds and Federal Direct Student Loan funds were accurately and timely reported to NSLDS. In addition, when SUBR attempted to submit the enrollment report, there was a file structure error preventing the data from being submitted timely.
Effect:
Inaccurate and untimely reporting of changes in enrollment status could impact the student’s Pell Grant or student loan eligibility and result in noncompliance with federal regulations. For students moving into repayment, reporting of changes in enrollment status affects when the grace period begins and how soon a student must begin repaying loan funds.
Recommendation:
Management should strengthen its procedures over changes in enrollment status for students receiving Federal Pell Grant Program funds and Federal Direct Student Loans to ensure SUBR reports accurate and timely information to NSLDS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-54).
2024-017 - Control Weakness over and Noncompliance with Return of Title IV Funds
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
SUBR did not have adequate controls in place to ensure that the return of Title IV funds were properly calculated and returned to the U.S. Department of Education (USDOE) as required by federal regulations. In addition, post-withdrawal disbursement requirements for Title IV funds were not followed.
In a non-statistical sample of 60 students for the Fall 2023 and Spring 2024 semesters, from a population of 456 students who received Title IV funding and ceased attendance or never began attendance, the following was noted:
• For 16 students (27%), SUBR did not perform a return of Title IV funds calculation because the students were incorrectly identified as enrolled rather than unofficially withdrawn, which resulted in $39,183 of Title IV funds not being returned to the USDOE.
• For two students (3%), SUBR used incorrect withdrawal dates in the return of Title IV calculation, which resulted in one of the students requiring a Title IV return of $372.
• For three students (5%), SUBR did not follow the requirements for post-withdrawal disbursements of grant funds by not providing timely notification of the post-withdrawal disbursement to the student or parent.
Criteria:
34 CFR 668.22(a)(1) requires the institution to determine the amount of Title IV funds that the student earned as of the student’s withdrawal date. 34 CFR 668.22(e)(4) requires the institution to calculate the amount of unearned Title IV assistance to be returned. 34 CFR 668.22(j) requires the institution to return unearned Title IV funds within 45 days of the determination date of withdrawal, and to determine the date of withdrawal within 30 days after the end of the period of enrollment.
Per 34 CFR 668.22(a)(6)(iii)(A), for post withdrawal disbursements, a written notification must be provided to the student or parent within 30 days of the date of the institution’s determination that the student withdrew.
34 CFR 668.22(e)(2) the percentage of Title IV funds earned by the student is equal to the percentage of the period of enrollment that the student completed if this date occurs on or before completion of 60 percent of the period of enrollment.
Cause:
SUBR did not follow its procedures to unofficially withdraw students who stopped attending classes prior to completing 60% of the semester. Also, instructors entered conflicting information for students’ final grade and/or students’ last day of attendance. In addition, federal guidelines were not followed when making a post withdrawal disbursement.
Effect:
Failure to return Title IV funds, prepare accurate calculations, and follow requirements related to post withdrawal disbursements resulted in noncompliance with federal regulations and increases the risk that federal funds will be required to be returned to the federal grantor. Audit procedures identified $39,555 that SUBR did not return to the USDOE, which are considered questioned costs.
Recommendation:
Management should strengthen controls to ensure that funds are returned timely to the USDOE, ensure that all return of Title IV funds calculations are performed accurately, and federal guidance for post withdrawal disbursements is followed. In addition, management should ensure instructors submit accurate grade and attendance information in order to determine a student’s correct enrollment status and last day of attendance.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-56).
2024-018 - Inadequate Internal Controls and Noncompliance with Cash Management Requirements
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Cash Management
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
SUBR did not comply with federal regulations regarding the timely return of excess Title IV funds. In our audit procedures for the fiscal year ended June 30, 2024, we noted SUBR overdrew $9.7 million in Federal Direct Student Loan funds on September 18, 2023, as the amount drawn exceeded what was needed for immediate loan disbursements to students. However, total Title IV funds were not overdrawn as there was also an under draw of the Federal Pell Grant Program (Pell). The overdraw on September 18, 2023, did not cause SUBR to have excess cash until Pell funds were drawn on September 29, 2023. Federal regulations consider an institution to have excess cash if those funds are not distributed within three business days of the draw. At the end of the third business day subsequent to the draw on September 29, 2023, SUBR had excess cash of approximately $2 million in Title IV funding. The excess cash was later detected by SUBR and refunded to the U.S. Department of Education (USDOE) on November 4, 2023; therefore, no questioned costs existed at fiscal year-end.
Criteria:
Per 34 CFR 668.162(b), under the advance payment method, an institution submits a request for funds to the USDOE. The institution’s request may not exceed the amount of funds the institution needs immediately for disbursements the institution has made or will make to eligible students and parents.
Per 34 CFR 668.166(a), USDOE considers excess cash to be any amount of Title IV program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution received those funds from the USDOE.
Cause:
Due to a weakness in internal controls over drawdowns of Title IV funds, SUBR drew funds from Federal Direct Student Loans on September 18, 2023, but a portion of these funds should have been drawn from the Federal Pell Grant Program. Although SUBR has a reconciliation process, it is not suitably designed to timely detect overdraws for Title IV programs.
Effect:
Failure to implement sufficient controls over cash management requirements resulted in an overdraw of Title IV funds and noncompliance with cash management regulations.
Recommendation:
Management should strengthen its procedures over the drawing of Title IV funds to ensure timely compliance with federal cash management requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-58).
2024-019 - Noncompliance and Inadequate Controls over Direct Loan Monthly Reconciliations
State Entity: University of Louisiana at Monroe (ULM)
Award Year: 2024
Award Numbers: P268K241521, P268K251521
Compliance Requirement: Cash Management
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The University of Louisiana at Monroe (ULM) did not have adequate controls in place to ensure that monthly reconciliations for the Federal Direct Student Loans program were performed to meet the federal requirements. In addition, ULM did not have documented or verifiable policies and procedures for the reconciliation process. Each month, the U.S. Department of Education’s (USDOE) Common Origination and Disbursement (COD) system provides the institution the School Account Statement (SAS) data file, which must be used to reconcile the institution’s financial records to ensure the institution has transmitted accurate and complete student data to the COD system for all Federal Direct Student Loans borrowers in accordance with federal regulations.
In a non-statistical sample of two monthly Direct Loan reconciliations, we found that for both months selected:
• ULM did not utilize the SAS to reconcile all Direct Loan funds received and disbursed as recorded by USDOE systems to ULM’s internal records.
• Monthly reconciliations did not include sufficient support identifying discrepancies and/or resolution.
• Reconciliations did not identify any remaining cash balances or justification for such.
• ULM could not provide evidence of review for their monthly reconciliations.
Criteria:
34 CFR 685.300(b)(5) requires that schools must, on a monthly basis, reconcile institutional records with Federal Direct Student Loans funds received and disbursement records submitted to and accepted by USDOE.
The 2023 - 2024 Federal Student Financial Aid Handbook (Vol. 4, Ch. 6) notes that a school that participates in the Federal Direct Student Loans Program is required to reconcile cash (funds it received from the G5 system to pay its students) with disbursements (actual disbursement records) it submitted to the COD system monthly. A school is considered to have completed its monthly reconciliation when all differences between the Direct Loan SAS and the school’s internal records have been resolved or documented and the school’s ending cash balance is zero. In addition, schools should clearly outline their reconciliation process and documentation requirements in their policies and procedures.
Cause:
ULM did not have documented or verifiable policies and procedures for the reconciliation process.
Effect:
Failure to properly perform and document the required monthly Direct Loan reconciliations could result in undetected discrepancies between the institution’s financial records and data in the COD system which could result in cash overdraws.
Recommendation:
Management should develop adequate internal controls, including documenting policies and procedures to ensure accurate preparation, documentation, and review of Direct Loan monthly reconciliations as required by the federal grantor.
Management’s Response and Corrective Action Plan:
Management acknowledged the issues noted in the finding and provided a corrective action plan (B-66).
2024-032 - Inadequate Controls over and Noncompliance with Federal Financial Reporting
State Entity: Louisiana Department of Health - Office of Public Health (OPH)
Award Year: 2024
Award Number: NU90TP922016
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Louisiana Department of Health - Office of Public Health (OPH) did not have adequate controls in place to ensure that federal financial reports were accurate, current, and complete prior to being submitted to the federal agency for the Public Health Emergency Preparedness federal program for the June 30, 2024 reporting period. OPH's annual report for the reporting period June 30, 2024 improperly included expenditures totaling $146,598 from the period July 2024 through September 2024.
Criteria:
2 CFR 200.302(b)(2) states accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in 2 CFR 200.328 and 200.329 is required. In addition, the U.S. Centers for Disease Control and Prevention guidance indicates that the report must include only those funds authorized and expended during the timeframe of the report.
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Cause:
OPH did not have adequate controls in place to ensure the federal financial report only included expenditures for the period being reported prior to submission to the federal agency.
Effect:
Failure to establish adequate controls over financial reporting could result in inaccurate information being reported to the federal agency.
Recommendation:
OPH should design and implement controls to ensure all information contained in the financial reports submitted to federal agencies is accurate, current, and complete for the reporting period covered under the report.
Management’s Response and Corrective Action Plan:
Management did not concur with the finding stating that the amount in question is immaterial and does not misstate the federal financial report. To address the control weakness, management provided a corrective action plan (B-36).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-021 – Unauthorized Employee Fuel Transactions
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2023, 2024
Award Numbers: 2301LAFOST, 2301LASOSR, 2401LAFOST
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The DCFS Bureau of Audit and Compliance Services investigated and identified multiple instances of unauthorized fuel transactions made by a former DCFS employee of approximately $97,500 in fiscal year 2024. Of that total, $5,191 was charged to the Social Services Block Grant federal program and $32,555 was charged to the Foster Care federal program through the cost allocation process.
Criteria:
DCFS policy and procedures require each DCFS office to have a Fleet or Safety Coordinator responsible for overseeing the FuelTrac account. DCFS Policy 1-15 also requires each office to establish internal management procedures and guidelines for handling state vehicles.
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Cause:
The misappropriation occurred because DCFS did not have adequate controls in place to timely detect or prevent the employee from making and concealing unauthorized fuel transactions.
Effect:
As of March 31, 2024, the employee being investigated resigned. Inadequate controls over FuelTrac increases the risk that inappropriate transactions could occur and unallowable costs could be charged to federal programs. The total identified federal questioned cost in fiscal year 2024 due to this misappropriation is $37,746.
Recommendation:
DCFS should establish policies and procedures at an appropriate level to ensure fuel transactions are properly monitored and that duties are properly segregated.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-020 – Control Weakness over Social Services Block Grant Expenditures
State Entity: Department of Children and Family Services (DCFS)
Award Year: 2024
Award Number: 2401LASOSR
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures charged to the Social Services Block Grant (SSBG) federal program through their Tracking Information Payment System (TIPS) were supported and approved.
In a statistical sample of 40 expenditures out of a population of 64,711 expenditure transactions totaling $17,347,798, we noted the following deviations:
• For one (3%) transaction, DCFS was unable to provide the TIPS payment form, which shows evidence of review and approval for the payment detail. However, DCFS did provide the invoice, which included payment detail information to support allowability of the expenditure.
• For one (3%) transaction, the TIPS payment form lacked evidence of review and approval as it was not signed by a supervisor.
Criteria:
2 CFR 200.303 requires non-federal entities 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:
Management represented that the cause for these deviations is due to a shortage of staffing in positions that prepare and process these TIPS forms.
Effect:
Failure to maintain adequate controls increases the risk that errors and omissions may occur and remain undetected.
Recommendation:
Management should strengthen internal controls to ensure that SSBG expenditures maintained in TIPS are supported and approved.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2024-021 – Unauthorized Employee Fuel Transactions
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2023, 2024
Award Numbers: 2301LAFOST, 2301LASOSR, 2401LAFOST
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The DCFS Bureau of Audit and Compliance Services investigated and identified multiple instances of unauthorized fuel transactions made by a former DCFS employee of approximately $97,500 in fiscal year 2024. Of that total, $5,191 was charged to the Social Services Block Grant federal program and $32,555 was charged to the Foster Care federal program through the cost allocation process.
Criteria:
DCFS policy and procedures require each DCFS office to have a Fleet or Safety Coordinator responsible for overseeing the FuelTrac account. DCFS Policy 1-15 also requires each office to establish internal management procedures and guidelines for handling state vehicles.
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Cause:
The misappropriation occurred because DCFS did not have adequate controls in place to timely detect or prevent the employee from making and concealing unauthorized fuel transactions.
Effect:
As of March 31, 2024, the employee being investigated resigned. Inadequate controls over FuelTrac increases the risk that inappropriate transactions could occur and unallowable costs could be charged to federal programs. The total identified federal questioned cost in fiscal year 2024 due to this misappropriation is $37,746.
Recommendation:
DCFS should establish policies and procedures at an appropriate level to ensure fuel transactions are properly monitored and that duties are properly segregated.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2024-023 - Inadequate Controls over Billing for Behavioral Health Services
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-021)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LDH, the managed care organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in the Medical Assistance Program and Children’s Health Insurance Program were properly billed and that improper encounters were denied. For fiscal year 2024, we identified approximately $14.4 million in encounters for services between July 1, 2023, and June 30, 2024, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors. Providers were paid $11,075,376 for 166,209 encounters that were billed using incorrect procedure and modifier codes. Providers were paid $3,306,206 for 32,987 encounters that exceeded LDH’s specialized behavioral health services fee schedules.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Implementation of this protocol began in fiscal year 2023 and has continued through fiscal year 2024. However, auditors noted that for the second year in a row the EQR’s analysis did not review the use of location modifiers in encounters and did not exclude encounters from providers that were approved by MCO’s to bill in excess of the fee schedule.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of these providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also uses this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-14).
2024-024 - Inadequate Controls over Reporting and Matching Federal Compliance Requirements for the Medicaid and Children's Health Insurance Programs
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Matching, Level of Effort, Earmarking; Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-022)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to ensure compliance with reporting and matching requirements for the Medical Assistance Program (Medicaid) and the Children’s Health Insurance Program (CHIP) for all four quarters of fiscal year 2024. The following errors were noted throughout the Centers for Medicare and Medicaid Services (CMS) quarterly federal expenditure reports prepared by LDH:
• For each quarter of fiscal year 2024, quarterly adjustment expenditures were either incorrectly recorded on the CMS quarterly federal expenditure reports and/or within the financial statements.
• For both the March 31, 2024 and June 30, 2024 reports LDH incorrectly completed the Medicaid Drug Rebate Schedule 64.9R. For the March 31, 2024 report, an invoice amount of $0 was reported as the rebates invoiced in this quarter rather than the correct amount of $243,910,667. For the June 30, 2024 report, LDH incorrectly adjusted the schedule 64.9R resulting in numerous errors and a net understatement of $220,130,454 in an effort to correct the error from the March 31, 2024 report.
• LDH incorrectly overstated federal fiscal year 2023 Disproportionate State Hospital (DSH) payments by $820,395 on schedule 64.9D for the September 30, 2023 report.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.328 and §200.329 is required. The Medicaid and CHIP programs require quarterly reporting to CMS detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, a good system of internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not have adequate controls in place to ensure the reconciliation of the expenditures recorded in LDH’s financial statements to the expenditures reported to CMS. In addition, the quarterly adjustments were not properly reviewed to ensure that adjustments affecting the financial statements were properly recorded.
Effect:
As a result, LDH failed to detect multiple errors between the financial statements and CMS quarterly federal expenditure reports, as well as errors on various schedules in the quarterly reports. Uncorrected errors in the reports increase the risk that federal funds will be overdrawn or underdrawn and place LDH in noncompliance with federal regulations.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports and quarterly adjustments to ensure federal expenditures are accurately reported. In addition, LDH management should incorporate a reconciliation of federal expenditures in the financial statements to federal expenditures reported to CMS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-17).
2024-026 - Inadequate Internal Controls over Eligibility Determinations
State Entity: Louisiana Department of Health (LDH)
Award Years: 2022, 2023, 2024
Award Numbers: 2205LA5MAP, 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2023-024)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fifth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medical Assistance Program (Medicaid) and Children’s Health Insurance Program (CHIP) programs for the fiscal year ended June 30, 2024.
From a population of 73,333,570 Medicaid Per-Member-Per-Month (PMPM) and Fee-For-Service (FFS) payments totaling $13.3 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for nineteen (31.67%) out of 60 payments tested.
The following errors were noted for Medicaid:
• For four payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For 11 payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For two payments, LDH did not follow policies to discontinue coverage at the end of the COVID -19 public health emergency for beneficiaries whose citizenship status remained unverified at the end of their reasonable opportunity period. These beneficiaries were therefore not validly enrolled during fiscal year 2024.
• For one payment, LDH failed to continue coverage on a beneficiary who had been determined eligible at renewal, causing a one-month lapse in coverage.
• For one payment, LDH personnel failed to verify Louisiana residency for the initial application on a beneficiary who resided out of state. The beneficiary’s application listed an out of state address in a border city. LDH failed to review the address to verify the exact state of residence, which would have resulted in a denial of coverage. Therefore, the beneficiary was not validly enrolled at initial application in fiscal year 2022.
In addition, from a population of 6,646,797 CHIP PMPM and FFS payments totaling $538 million, a non-statistical sample of 60 CHIP payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for eleven (18.33%) out of 60 payments tested.
The following errors were noted for CHIP:
• For two payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For five payments, issues in the Louisiana Medicaid Eligibility Determination System resulted in inadequate documentation within the case record to support the eligibility redetermination for the beneficiary.
• For three payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For one payment, LDH personnel failed to accurately perform all required eligibility determinations before enrolling the beneficiary, therefore the beneficiary was invalidly enrolled when they initially applied for eligibility in fiscal year 2023.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a beneficiary must meet all eligibility factors and the beneficiary’s case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid Eligibility Manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility determination and redeterminations per the federal regulations and the Medicaid Eligibility Manual.
Effect:
Proper eligibility determination and redetermination are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $28,793 in federal funds were noted in relation to the Medicaid beneficiaries who were invalidly enrolled or whose renewal determination resulted in an erroneous certification of eligibility.
Questioned costs totaling $6,042 in federal funds were noted in relation to the CHIP beneficiary who was invalidly enrolled. We did not note any questioned costs related to the other errors.
Recommendation:
LDH should ensure its employees follow procedures and federal regulations relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding stating they did not concur with one Medicaid and six CHIP errors noted within the finding. For those errors that management concurred with, a corrective action plan was provided (B-24).
Auditor’s Additional Comments:
LDH noted in their response they did not concur with the errors noted for the Medicaid and CHIP renewals related to SNAP or express lane eligibility not being properly documented and indicated that system logs were provided. The LaMEDS log tables were considered by the auditor and no errors in the eligibility determination were reported. The errors noted in the finding relate to a weakness in internal controls as the system bug noted in the case record produced inadequate documentation. In addition, LDH stated in their response they did not concur with one CHIP finding for inadequate documentation regarding income to support the renewal determination. The error noted by the auditor did not relate specifically to the missing affidavit, but that sufficient support was not obtained by LDH to support the change in income from the application.
2024-027 - Noncompliance with and Inadequate Controls over Maternity Kick Payments
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-025)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not adhere to established policies and procedures regarding maternity kick payments for fiscal year 2024. Maternity kick payments are one-time payments made by LDH to reimburse the Healthy Louisiana Managed Care Organizations (MCOs) for the costs associated with pre- and post-partum maternal care, as well as the delivery event itself. These payments are paid to an MCO upon submission of satisfactory evidence of the event or treatment which is referred to as a triggering event.
During the period July 1, 2023, through June 30, 2024, LDH paid out 30,004 Medical Assistance Program (Medicaid) maternity kick payments totaling $307 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all Medicaid maternity kick payments, we identified 21 kick payments totaling $146,584 in federal funds that were paid to the Healthy Louisiana MCOs based on an ineligible triggering event.
During the period July 1, 2023, through June 30, 2024, LDH paid out 4,672 Children’s Health Insurance Program (CHIP) maternity kick payments totaling $47.7 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all CHIP maternity kick payments, we identified three kick payments totaling $26,218 in federal funds that were paid to the Healthy Louisiana MCOs based on an ineligible triggering event.
Criteria:
Louisiana Administrative Code (LAC) Title 50, Part I, Section 3509(A)(5) states MCOs may be reimbursed a one-time supplemental lump sum payment, referred to as a kick payment. The kick payment is intended to cover the cost of a specific care event or treatment. Payment will be made to the MCO upon submission of satisfactory evidence of the event or treatment under Title XIX to the Social Security Act. In accordance with this guidance, LDH policies require an eligible triggering event to occur before a maternity kick payment can be made. LDH procedures also require that a review of kick payments be performed semi-annually.
Cause:
LDH did not adhere to the established policies and procedures regarding maternity kick payments and their reviews in FY 2024 failed to notate the coding error that allowed kick payments to be paid for ineligible triggering events.
Effect:
There is an increased risk that maternity kick payments are being paid to Healthy Louisiana MCOs for triggering events that may not have taken place or do not have satisfactory supporting evidence.
Recommendation:
LDH should strengthen existing policies and procedures to ensure all maternity kick payments are supported with an eligible triggering event before payment is made to the MCOs.
Management’s Response and Corrective Action Plan:
Management did not concur with the finding stating corrective action is not necessary, as recoveries were identified and processed as part of the regularly scheduled review process; however, LDH will modify the timing of its final quarterly reviews to ensure that payment/voids in June do not result in a finding (B-26).
Auditor’s Additional Comments:
As part of LDH’s procedures over maternity kick payments, LDH has an approved set logic in their claims processing system to pay maternity kick payments to MCOs when an eligible triggering event occurs. As LDH noted in their finding response, the errors noted in the finding were due to an error in this logic. While the logic error was discovered in their September 2024 review, adequate internal controls should be in place and operating effectively to ensure the logic is accurate at the time it is applied to transactions. In addition, recovery from the MCO also does not constitute the return of federal funds. While the MCO may have returned the funds to LDH, the funds must then be returned to the federal government on the next quarterly CMS 64 report. LDH did not provide evidence of this return.
2024-029 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-026)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the seventh consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 23,170 providers paid during fiscal year 2024, it was determined that 8,209 (35%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medical Assistance Program (Medicaid) agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal launched in fiscal year 2022 for existing providers as of March of 2022, new providers were not invited to enroll as this required an amendment to the contract with Gainwell and additional costs. Therefore, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2024 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-30).
2024-031 - Weakness in Controls over and Noncompliance with Provider Overpayments
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-027)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments. From a population of 77,634 transactions totaling $147.1 million, a non-statistical sample of 59 provider overpayments was selected and tested to determine if LDH complied with the federal regulations regarding the refunding of the federal share of provider overpayments. For one (1.69%) out of 59 provider overpayments selected for testing, there was no supporting documentation available to identify the date of discovery. Therefore, the auditor was unable to ensure the federal share of the overpayment was returned timely.
In addition, LDH did not provide evidence that an adequate review was performed for three out of the four (75%) quarterly CMS-64 Line 9 reconciliations. These reviews ensure provider overpayments are reported timely and on the correct line of the CMS-64 federal expenditure quarterly report.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
In December of 2023, as part of their corrective action plan from fiscal year 2023, LDH updated their policy to require the submitting department/agency to specifically identify the date of discovery when providing provider overpayment information to LDH. Although implementation of the new policy began in fiscal year 2024, the policy was not in effect for 6 months out of the year.
In addition, LDH did not ensure controls over provider overpayments were in place and properly monitored for every quarter during fiscal year 2024.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should strengthen internal controls to ensure compliance with federal regulations regarding the timely return of the federal share of provider overpayment collections.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-34).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2020, 2021, 2022
Award Numbers: 1R01MH125395, 2046460, R37AI094595
Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions
Pass-Through Entity: Northwestern University
Repeat Finding: Yes (Prior Year Finding No. 2023-007)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed.
From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-60).
2024-034 - Misappropriation of Research and Development Cluster Funds
State Entity: Louisiana Tech University (La Tech)
Award Year: 2024
Award Numbers: GR301449, GR301541
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
In December 2024, Louisiana Tech University (La Tech) discovered that during the period from February 2024 through November 2024, nine electronic fund transfer (EFT) payments to an out-of-state university totaling $206,451 had been fraudulently diverted to unknown person(s). La Tech reported the fraud to appropriate law enforcement and to the federal grantor.
Criteria:
2 CFR 200.303(a) requires non-federal entities to establish and maintain internal control over the federal award that provides reasonable compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.403(a) indicates costs must be necessary and reasonable for the performance of the federal award.
Cause:
The misappropriation of funds occurred after an unknown individual(s) submitted fraudulent emails impersonating La Tech’s point of contact with the out-of-state university, requesting a change in payment method from physical check to EFT. La Tech processed the request under the incorrect assumption that it was legitimate. The stolen funds originated as grant funding (Research and Development Cluster) from the National Institutes of Health (NIH). La Tech became the direct recipient of the NIH grant funding when La Tech hired a faculty member that had been awarded the NIH grants while employed at the out-of-state university. Research related to the grant funding continued at the out-of-state university and La Tech, as the prime recipient, provided reimbursement.
Effect:
As a result of investigation, La Tech identified $206,451 in payments that were fraudulently diverted to unknown person(s).
In response to this cyber fraud, La Tech management has represented that they are evaluating opportunities to further enhance its internal controls and verification procedures to better safeguard against increasingly sophisticated cyber threats targeting payment remittance processes.
Recommendation:
La Tech should continuously evaluate its internal controls to guard against future fraud attempts.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-49).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-033 - Noncompliance with and Inadequate Controls over Subrecipient Monitoring Requirements at Pennington Biomedical Research Center
State Entity: Louisiana State University and Related Campuses
Award Years: 2021, 2022, 2023
Award Numbers: 1P50MD017338-01, 1R01DK132011-01A1, 1U01AG073204-01, 1U01CA271279-01
Compliance Requirement: Subrecipient Monitoring
Pass-Through Entity: University of Alabama at Birmingham
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Pennington Biomedical Research Center (PBRC) did not adequately monitor subrecipients of the Research and Development (R&D) Cluster programs. In a non-statistical sample of nine grants to subrecipients, out of a population of 61 grants, it was noted that for five (56%) of the grants evaluated, PBRC could not provide evidence that the required risk analyses were performed to evaluate the subrecipient’s fraud risk and risk of noncompliance with the subaward agreement.
Criteria:
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient’s fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring.
Cause:
PBRC did not follow established controls to ensure that R&D Cluster award subrecipients were monitored in accordance with federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal grantor.
Recommendation:
PBRC should strengthen controls to ensure risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-38).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-033 - Noncompliance with and Inadequate Controls over Subrecipient Monitoring Requirements at Pennington Biomedical Research Center
State Entity: Louisiana State University and Related Campuses
Award Years: 2021, 2022, 2023
Award Numbers: 1P50MD017338-01, 1R01DK132011-01A1, 1U01AG073204-01, 1U01CA271279-01
Compliance Requirement: Subrecipient Monitoring
Pass-Through Entity: University of Alabama at Birmingham
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Pennington Biomedical Research Center (PBRC) did not adequately monitor subrecipients of the Research and Development (R&D) Cluster programs. In a non-statistical sample of nine grants to subrecipients, out of a population of 61 grants, it was noted that for five (56%) of the grants evaluated, PBRC could not provide evidence that the required risk analyses were performed to evaluate the subrecipient’s fraud risk and risk of noncompliance with the subaward agreement.
Criteria:
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient’s fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring.
Cause:
PBRC did not follow established controls to ensure that R&D Cluster award subrecipients were monitored in accordance with federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal grantor.
Recommendation:
PBRC should strengthen controls to ensure risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-38).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-033 - Noncompliance with and Inadequate Controls over Subrecipient Monitoring Requirements at Pennington Biomedical Research Center
State Entity: Louisiana State University and Related Campuses
Award Years: 2021, 2022, 2023
Award Numbers: 1P50MD017338-01, 1R01DK132011-01A1, 1U01AG073204-01, 1U01CA271279-01
Compliance Requirement: Subrecipient Monitoring
Pass-Through Entity: University of Alabama at Birmingham
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Pennington Biomedical Research Center (PBRC) did not adequately monitor subrecipients of the Research and Development (R&D) Cluster programs. In a non-statistical sample of nine grants to subrecipients, out of a population of 61 grants, it was noted that for five (56%) of the grants evaluated, PBRC could not provide evidence that the required risk analyses were performed to evaluate the subrecipient’s fraud risk and risk of noncompliance with the subaward agreement.
Criteria:
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient’s fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring.
Cause:
PBRC did not follow established controls to ensure that R&D Cluster award subrecipients were monitored in accordance with federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal grantor.
Recommendation:
PBRC should strengthen controls to ensure risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-38).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-034 - Misappropriation of Research and Development Cluster Funds
State Entity: Louisiana Tech University (La Tech)
Award Year: 2024
Award Numbers: GR301449, GR301541
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
In December 2024, Louisiana Tech University (La Tech) discovered that during the period from February 2024 through November 2024, nine electronic fund transfer (EFT) payments to an out-of-state university totaling $206,451 had been fraudulently diverted to unknown person(s). La Tech reported the fraud to appropriate law enforcement and to the federal grantor.
Criteria:
2 CFR 200.303(a) requires non-federal entities to establish and maintain internal control over the federal award that provides reasonable compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.403(a) indicates costs must be necessary and reasonable for the performance of the federal award.
Cause:
The misappropriation of funds occurred after an unknown individual(s) submitted fraudulent emails impersonating La Tech’s point of contact with the out-of-state university, requesting a change in payment method from physical check to EFT. La Tech processed the request under the incorrect assumption that it was legitimate. The stolen funds originated as grant funding (Research and Development Cluster) from the National Institutes of Health (NIH). La Tech became the direct recipient of the NIH grant funding when La Tech hired a faculty member that had been awarded the NIH grants while employed at the out-of-state university. Research related to the grant funding continued at the out-of-state university and La Tech, as the prime recipient, provided reimbursement.
Effect:
As a result of investigation, La Tech identified $206,451 in payments that were fraudulently diverted to unknown person(s).
In response to this cyber fraud, La Tech management has represented that they are evaluating opportunities to further enhance its internal controls and verification procedures to better safeguard against increasingly sophisticated cyber threats targeting payment remittance processes.
Recommendation:
La Tech should continuously evaluate its internal controls to guard against future fraud attempts.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-49).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-008 - Noncompliance with Subrecipient Monitoring Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2019 - 2023
Award Numbers: DE-EE0009421, FA9550-21-1-0215, M19AC00015, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-008)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, UL Lafayette did not adequately monitor subrecipients of the Research and Development (R&D) Cluster Programs. In a non-statistical sample of seven subawards out of a population of 50 subawards, it was noted that for six (85.7%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For three (42.9%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the required risk analyses were performed to evaluate each subrecipients’ fraud risk and risk of noncompliance with federal regulations and the terms of the subaward. For two of the subrecipients reviewed (28.6%), UL Lafayette was unable to provide documentation that ensured each subrecipient obtained the required audit and that the audit was reviewed so that timely and appropriate action could be taken for any findings pertaining to the federal awards, as required by federal regulations. Additionally, for one (14.3%) of the subrecipients evaluated, the subaward documents did not contain the federal award date as required by federal regulations.
Criteria:
Per 2 CFR 200.332(b)(1)(iv), all pass-through entities must ensure that every subaward includes the federal award date.
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient's fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2 CFR 200.332(e)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
2 CFR 200.332(e)(2) and (3) require pass-through entities to issue a management decision on applicable audit findings, in accordance with 2 CFR 200.521, within six months after acceptance of the subrecipient’s audit report by the Federal Audit Clearinghouse, and ensure that the subrecipient takes timely and appropriate corrective action on all findings.
Per 2 CFR 200.332(g), pass-through entities are responsible for verifying that every subrecipient is audited as required by 2 CFR Part 200, subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in CFR 200.501 of $750,000 or more in federal awards during the subrecipient’s fiscal year.
Cause:
UL Lafayette did not have sufficient controls in place to adequately monitor subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that all required financial and performance reports are obtained and reviewed and that all required subrecipient audit reports are obtained and reviewed in order to evaluate the impact of any findings noted by the audit and issue management decision letters, if applicable. In addition, UL Lafayette should strengthen controls to ensure that required information is included in the subaward documents and that risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-64).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2020, 2021, 2022
Award Numbers: 1R01MH125395, 2046460, R37AI094595
Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions
Pass-Through Entity: Northwestern University
Repeat Finding: Yes (Prior Year Finding No. 2023-007)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed.
From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-60).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-033 - Noncompliance with and Inadequate Controls over Subrecipient Monitoring Requirements at Pennington Biomedical Research Center
State Entity: Louisiana State University and Related Campuses
Award Years: 2021, 2022, 2023
Award Numbers: 1P50MD017338-01, 1R01DK132011-01A1, 1U01AG073204-01, 1U01CA271279-01
Compliance Requirement: Subrecipient Monitoring
Pass-Through Entity: University of Alabama at Birmingham
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Pennington Biomedical Research Center (PBRC) did not adequately monitor subrecipients of the Research and Development (R&D) Cluster programs. In a non-statistical sample of nine grants to subrecipients, out of a population of 61 grants, it was noted that for five (56%) of the grants evaluated, PBRC could not provide evidence that the required risk analyses were performed to evaluate the subrecipient’s fraud risk and risk of noncompliance with the subaward agreement.
Criteria:
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient’s fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring.
Cause:
PBRC did not follow established controls to ensure that R&D Cluster award subrecipients were monitored in accordance with federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal grantor.
Recommendation:
PBRC should strengthen controls to ensure risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-38).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-023 - Inadequate Controls over Billing for Behavioral Health Services
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-021)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LDH, the managed care organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in the Medical Assistance Program and Children’s Health Insurance Program were properly billed and that improper encounters were denied. For fiscal year 2024, we identified approximately $14.4 million in encounters for services between July 1, 2023, and June 30, 2024, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors. Providers were paid $11,075,376 for 166,209 encounters that were billed using incorrect procedure and modifier codes. Providers were paid $3,306,206 for 32,987 encounters that exceeded LDH’s specialized behavioral health services fee schedules.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Implementation of this protocol began in fiscal year 2023 and has continued through fiscal year 2024. However, auditors noted that for the second year in a row the EQR’s analysis did not review the use of location modifiers in encounters and did not exclude encounters from providers that were approved by MCO’s to bill in excess of the fee schedule.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of these providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also uses this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-14).
2024-024 - Inadequate Controls over Reporting and Matching Federal Compliance Requirements for the Medicaid and Children's Health Insurance Programs
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Matching, Level of Effort, Earmarking; Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-022)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to ensure compliance with reporting and matching requirements for the Medical Assistance Program (Medicaid) and the Children’s Health Insurance Program (CHIP) for all four quarters of fiscal year 2024. The following errors were noted throughout the Centers for Medicare and Medicaid Services (CMS) quarterly federal expenditure reports prepared by LDH:
• For each quarter of fiscal year 2024, quarterly adjustment expenditures were either incorrectly recorded on the CMS quarterly federal expenditure reports and/or within the financial statements.
• For both the March 31, 2024 and June 30, 2024 reports LDH incorrectly completed the Medicaid Drug Rebate Schedule 64.9R. For the March 31, 2024 report, an invoice amount of $0 was reported as the rebates invoiced in this quarter rather than the correct amount of $243,910,667. For the June 30, 2024 report, LDH incorrectly adjusted the schedule 64.9R resulting in numerous errors and a net understatement of $220,130,454 in an effort to correct the error from the March 31, 2024 report.
• LDH incorrectly overstated federal fiscal year 2023 Disproportionate State Hospital (DSH) payments by $820,395 on schedule 64.9D for the September 30, 2023 report.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.328 and §200.329 is required. The Medicaid and CHIP programs require quarterly reporting to CMS detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, a good system of internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not have adequate controls in place to ensure the reconciliation of the expenditures recorded in LDH’s financial statements to the expenditures reported to CMS. In addition, the quarterly adjustments were not properly reviewed to ensure that adjustments affecting the financial statements were properly recorded.
Effect:
As a result, LDH failed to detect multiple errors between the financial statements and CMS quarterly federal expenditure reports, as well as errors on various schedules in the quarterly reports. Uncorrected errors in the reports increase the risk that federal funds will be overdrawn or underdrawn and place LDH in noncompliance with federal regulations.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports and quarterly adjustments to ensure federal expenditures are accurately reported. In addition, LDH management should incorporate a reconciliation of federal expenditures in the financial statements to federal expenditures reported to CMS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-17).
2024-025 - Inadequate Controls over Waiver and Support Coordination Service Providers
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5MAP, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-023)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH paid Medicaid Home and Community Based Services (HCBS) claims for the New Opportunities Waiver (NOW) for waiver services that were not adequately documented. In addition, payments were made for the Residential Options Waiver (ROW) for waiver services that were not adequately documented. LDH also paid claims for support coordination services that were not documented in accordance with established policies.
Our testing of NOW and ROW waiver services included 729 claims paid in state fiscal year 2024 totaling $130,881 paid to two providers for 14 beneficiaries. Our test identified errors for 501 claims totaling $16,634 in federal funds, with some claims having multiple errors. The following errors were noted.
• For 383 claims for 13 beneficiaries, the waiver services provider did not provide adequate documentation to support billed services.
• For 121 claims for 9 beneficiaries, the waiver services provider did not provide documentation substantiating the reasons for departures from the approved plan of care (POC).
• For 50 claims for 3 beneficiaries, the waiver services provider billed the units of service for the claim at a rate that was inconsistent with the allocated billing rate per unit in the POC.
• For 4 claims for 1 beneficiary, the waiver services provider inappropriately billed for services that overlapped with non-waiver institutional services.
In addition to testing NOW and ROW waiver services, we also tested claims paid for support coordination services for the 14 waiver beneficiaries tested. In our test of 156 claims paid in fiscal year 2024 totaling $30,544 paid to six support coordination providers for the 14 beneficiaries, the support coordination service provider did not provide adequate documentation to support billed services for six claims for two beneficiaries. The federally funded portion of these claims totaled $768.
Criteria:
42 CFR Part 441, Subpart G requires states to operate their HCBS programs with certain assurances, including health and welfare, financial accountability, and evaluation of need. To meet these assurances, states must demonstrate that they have systems to effectively monitor the adequacy of service plans, the qualifications of providers, and the health and welfare of beneficiaries.
Waiver services are accessed through support coordinators who assist with development and monitoring of the beneficiary’s POC.
Auditors used LDH’s provider manuals to identify required documentation, which includes billing codes, an approved POC, time sheets or electronic clock in/out and progress notes. Provider manuals are intended to give a provider the information needed to fulfill its vendor agreement with the State of Louisiana, and is the basis for federal and state reviews of the program.
The beneficiary’s case record is required to include a copy of the approved POC, including any revisions. The POC documents the beneficiary’s assessed needs and types and quantity of services to address those needs and costs related to services. Direct service providers provide care to a beneficiary based on the approved POC.
According to the LDH service coordination provider manual, service logs are the means for clearly documenting services billed and must be reviewed by supervisors.
In addition, in accordance with 42 CFR 441.301(b)(1)(ii), waiver services are not furnished to individuals who are inpatients of a hospital, nursing facility or inpatient care facility for individuals with an intellectual disability.
Cause:
The errors noted in testing occurred because LDH failed to adequately monitor that NOW and ROW waiver and support coordination providers properly maintained adequate records, supporting documentation, and appropriately billed for services.
Effect:
Without adequate documentation a provider cannot substantiate and auditors cannot verify that the departures were beneficiary-driven and person-centered as required.
Without adequate supporting documentation there is reduced assurance that billed services were properly billed, were actually performed, beneficiaries are receiving needed services, and limited resources are allocated appropriately.
Questioned costs totaling $17,402 in federal funds were noted in relation to the waiver services provider and support coordination services provider not providing adequate documentation to support billed services.
Recommendation:
LDH should ensure all departmental policies and federal regulations for waiver and support coordination services are enforced, including documentation to support claims and evidence that departures from the approved POC meet the needs of the beneficiary. LDH should consider additional provider training regarding documentation requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding stating they did not concur with three of the errors noted in the determination of inadequate controls. For the error that management concurred with, a corrective action plan was provided (B-19).
Auditor’s Additional Comments:
LDH noted in their response they did not concur with three of the errors noted in the determination of inadequate controls over waiver and support coordination providers and have concerns with LLA’s overreliance on documentation in determining control adequacy. According to CFR 200.303(a) the recipient must establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. As part of obtaining reasonable assurance that the system of internal control is operating effectively and implemented, documentation supporting these controls is necessary for the auditor to make these determinations. All control mechanisms that were in place, documented, and provided to the auditor were considered.
In addition, LDH noted that there was no error in the departures from the approved POC nor were there errors associated with the claims that were reported as having been billed at the incorrect rate. As stated in the finding, documentation could not be provided to substantiate the reason for the departure from the approved POC for either the number of units or the allocated billing rate per unit.
Finally, LDH noted that while claims were paid for waiver services that overlapped with non-waiver institutional services, there was no error as LDH’s established controls identified and addressed the overlap in billing. The exceptions noted for these claims were a result of LDH not providing sufficient supporting documentation to the auditor showing the recoupment of the payments for the overlapping shifts.
2024-026 - Inadequate Internal Controls over Eligibility Determinations
State Entity: Louisiana Department of Health (LDH)
Award Years: 2022, 2023, 2024
Award Numbers: 2205LA5MAP, 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2023-024)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fifth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medical Assistance Program (Medicaid) and Children’s Health Insurance Program (CHIP) programs for the fiscal year ended June 30, 2024.
From a population of 73,333,570 Medicaid Per-Member-Per-Month (PMPM) and Fee-For-Service (FFS) payments totaling $13.3 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for nineteen (31.67%) out of 60 payments tested.
The following errors were noted for Medicaid:
• For four payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For 11 payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For two payments, LDH did not follow policies to discontinue coverage at the end of the COVID -19 public health emergency for beneficiaries whose citizenship status remained unverified at the end of their reasonable opportunity period. These beneficiaries were therefore not validly enrolled during fiscal year 2024.
• For one payment, LDH failed to continue coverage on a beneficiary who had been determined eligible at renewal, causing a one-month lapse in coverage.
• For one payment, LDH personnel failed to verify Louisiana residency for the initial application on a beneficiary who resided out of state. The beneficiary’s application listed an out of state address in a border city. LDH failed to review the address to verify the exact state of residence, which would have resulted in a denial of coverage. Therefore, the beneficiary was not validly enrolled at initial application in fiscal year 2022.
In addition, from a population of 6,646,797 CHIP PMPM and FFS payments totaling $538 million, a non-statistical sample of 60 CHIP payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for eleven (18.33%) out of 60 payments tested.
The following errors were noted for CHIP:
• For two payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For five payments, issues in the Louisiana Medicaid Eligibility Determination System resulted in inadequate documentation within the case record to support the eligibility redetermination for the beneficiary.
• For three payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For one payment, LDH personnel failed to accurately perform all required eligibility determinations before enrolling the beneficiary, therefore the beneficiary was invalidly enrolled when they initially applied for eligibility in fiscal year 2023.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a beneficiary must meet all eligibility factors and the beneficiary’s case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid Eligibility Manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility determination and redeterminations per the federal regulations and the Medicaid Eligibility Manual.
Effect:
Proper eligibility determination and redetermination are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $28,793 in federal funds were noted in relation to the Medicaid beneficiaries who were invalidly enrolled or whose renewal determination resulted in an erroneous certification of eligibility.
Questioned costs totaling $6,042 in federal funds were noted in relation to the CHIP beneficiary who was invalidly enrolled. We did not note any questioned costs related to the other errors.
Recommendation:
LDH should ensure its employees follow procedures and federal regulations relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding stating they did not concur with one Medicaid and six CHIP errors noted within the finding. For those errors that management concurred with, a corrective action plan was provided (B-24).
Auditor’s Additional Comments:
LDH noted in their response they did not concur with the errors noted for the Medicaid and CHIP renewals related to SNAP or express lane eligibility not being properly documented and indicated that system logs were provided. The LaMEDS log tables were considered by the auditor and no errors in the eligibility determination were reported. The errors noted in the finding relate to a weakness in internal controls as the system bug noted in the case record produced inadequate documentation. In addition, LDH stated in their response they did not concur with one CHIP finding for inadequate documentation regarding income to support the renewal determination. The error noted by the auditor did not relate specifically to the missing affidavit, but that sufficient support was not obtained by LDH to support the change in income from the application.
2024-029 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-026)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the seventh consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 23,170 providers paid during fiscal year 2024, it was determined that 8,209 (35%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medical Assistance Program (Medicaid) agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal launched in fiscal year 2022 for existing providers as of March of 2022, new providers were not invited to enroll as this required an amendment to the contract with Gainwell and additional costs. Therefore, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2024 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-30).
2024-031 - Weakness in Controls over and Noncompliance with Provider Overpayments
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-027)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments. From a population of 77,634 transactions totaling $147.1 million, a non-statistical sample of 59 provider overpayments was selected and tested to determine if LDH complied with the federal regulations regarding the refunding of the federal share of provider overpayments. For one (1.69%) out of 59 provider overpayments selected for testing, there was no supporting documentation available to identify the date of discovery. Therefore, the auditor was unable to ensure the federal share of the overpayment was returned timely.
In addition, LDH did not provide evidence that an adequate review was performed for three out of the four (75%) quarterly CMS-64 Line 9 reconciliations. These reviews ensure provider overpayments are reported timely and on the correct line of the CMS-64 federal expenditure quarterly report.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
In December of 2023, as part of their corrective action plan from fiscal year 2023, LDH updated their policy to require the submitting department/agency to specifically identify the date of discovery when providing provider overpayment information to LDH. Although implementation of the new policy began in fiscal year 2024, the policy was not in effect for 6 months out of the year.
In addition, LDH did not ensure controls over provider overpayments were in place and properly monitored for every quarter during fiscal year 2024.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should strengthen internal controls to ensure compliance with federal regulations regarding the timely return of the federal share of provider overpayment collections.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-34).
2024-022 - Inadequate Controls over and Noncompliance with Matching and Reporting Requirements Related to the Cost Share Process
State Entity: Louisiana Department of Health (LDH)
Award Year: 2024
Award Number: 2405LA5MAP
Compliance Requirements: Matching, Level of Effort, Earmarking; Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Louisiana Department of Health (LDH) did not have adequate controls in place to ensure the Federal Medical Assistance Percentage (FMAP) was appropriately updated in the cost share tables within LaGov for two out of four quarters (50%) in fiscal year ending June 30, 2024 for the Medical Assistance Program (Medicaid). The FMAP rate in the cost share tables was 1.5% higher than the rates established in the Federal Register for the quarters ending March 31, 2024 and June 30, 2024.
Criteria:
The state is required to pay part of the costs of providing Medicaid services and part of the costs of administering the program. The percentage of federal funding is determined based on the amount of the expenditures and application of the FMAP that is determined for each state using a formula outlined in section 1905(b) of the Act (42 USC 1396d). 2 CFR 200.306(b) states that the basic criteria for acceptable matching include that the funds are verifiable from the non-federal entity’s records, are not included as contributions for any other federal award, and are not paid by the federal government under another federal award.
The CMS-64 quarterly federal expenditure report requires the state to certify that the required amount of state and/or local funds were available and used to match the state’s allowable expenditures included in the report, and such state and/or local funds were in accordance with all applicable federal requirements for the non-federal share match of expenditures. The CMS-64 report also requires the state to certify that the expenditures included in the report are based on the state's accounting of actual recorded expenditures.
Cause:
The cost share tables that automatically calculate the federal and state share of expenditures were not properly updated for the period January 1, 2024 through June 30, 2024.
Effect:
Using the incorrect FMAP to allocate the state share of expenditures caused more expenditures to be allocated to federal funds. This error resulted in federal questioned costs of $87,591,863. Due to this, LDH was unable to provide evidence that the state match requirement was met for the federal expenditures reported on the March 31, 2024 and June 30, 2024 CMS-64 federal expenditure reports.
Recommendation:
LDH management should ensure the cost share tables are appropriately updated for all periods during the fiscal year. In addition, LDH should strengthen controls over preparation and review of the quarterly CMS-64 federal expenditure reports to ensure that the appropriate federal match is applied to qualifying expenditures and the required amount of state and/or local funds are available and used to match the state’s allowable expenditures.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-10).
2024-023 - Inadequate Controls over Billing for Behavioral Health Services
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-021)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LDH, the managed care organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in the Medical Assistance Program and Children’s Health Insurance Program were properly billed and that improper encounters were denied. For fiscal year 2024, we identified approximately $14.4 million in encounters for services between July 1, 2023, and June 30, 2024, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors. Providers were paid $11,075,376 for 166,209 encounters that were billed using incorrect procedure and modifier codes. Providers were paid $3,306,206 for 32,987 encounters that exceeded LDH’s specialized behavioral health services fee schedules.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Implementation of this protocol began in fiscal year 2023 and has continued through fiscal year 2024. However, auditors noted that for the second year in a row the EQR’s analysis did not review the use of location modifiers in encounters and did not exclude encounters from providers that were approved by MCO’s to bill in excess of the fee schedule.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of these providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also uses this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-14).
2024-024 - Inadequate Controls over Reporting and Matching Federal Compliance Requirements for the Medicaid and Children's Health Insurance Programs
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Matching, Level of Effort, Earmarking; Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-022)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to ensure compliance with reporting and matching requirements for the Medical Assistance Program (Medicaid) and the Children’s Health Insurance Program (CHIP) for all four quarters of fiscal year 2024. The following errors were noted throughout the Centers for Medicare and Medicaid Services (CMS) quarterly federal expenditure reports prepared by LDH:
• For each quarter of fiscal year 2024, quarterly adjustment expenditures were either incorrectly recorded on the CMS quarterly federal expenditure reports and/or within the financial statements.
• For both the March 31, 2024 and June 30, 2024 reports LDH incorrectly completed the Medicaid Drug Rebate Schedule 64.9R. For the March 31, 2024 report, an invoice amount of $0 was reported as the rebates invoiced in this quarter rather than the correct amount of $243,910,667. For the June 30, 2024 report, LDH incorrectly adjusted the schedule 64.9R resulting in numerous errors and a net understatement of $220,130,454 in an effort to correct the error from the March 31, 2024 report.
• LDH incorrectly overstated federal fiscal year 2023 Disproportionate State Hospital (DSH) payments by $820,395 on schedule 64.9D for the September 30, 2023 report.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.328 and §200.329 is required. The Medicaid and CHIP programs require quarterly reporting to CMS detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, a good system of internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not have adequate controls in place to ensure the reconciliation of the expenditures recorded in LDH’s financial statements to the expenditures reported to CMS. In addition, the quarterly adjustments were not properly reviewed to ensure that adjustments affecting the financial statements were properly recorded.
Effect:
As a result, LDH failed to detect multiple errors between the financial statements and CMS quarterly federal expenditure reports, as well as errors on various schedules in the quarterly reports. Uncorrected errors in the reports increase the risk that federal funds will be overdrawn or underdrawn and place LDH in noncompliance with federal regulations.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports and quarterly adjustments to ensure federal expenditures are accurately reported. In addition, LDH management should incorporate a reconciliation of federal expenditures in the financial statements to federal expenditures reported to CMS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-17).
2024-025 - Inadequate Controls over Waiver and Support Coordination Service Providers
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5MAP, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-023)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH paid Medicaid Home and Community Based Services (HCBS) claims for the New Opportunities Waiver (NOW) for waiver services that were not adequately documented. In addition, payments were made for the Residential Options Waiver (ROW) for waiver services that were not adequately documented. LDH also paid claims for support coordination services that were not documented in accordance with established policies.
Our testing of NOW and ROW waiver services included 729 claims paid in state fiscal year 2024 totaling $130,881 paid to two providers for 14 beneficiaries. Our test identified errors for 501 claims totaling $16,634 in federal funds, with some claims having multiple errors. The following errors were noted.
• For 383 claims for 13 beneficiaries, the waiver services provider did not provide adequate documentation to support billed services.
• For 121 claims for 9 beneficiaries, the waiver services provider did not provide documentation substantiating the reasons for departures from the approved plan of care (POC).
• For 50 claims for 3 beneficiaries, the waiver services provider billed the units of service for the claim at a rate that was inconsistent with the allocated billing rate per unit in the POC.
• For 4 claims for 1 beneficiary, the waiver services provider inappropriately billed for services that overlapped with non-waiver institutional services.
In addition to testing NOW and ROW waiver services, we also tested claims paid for support coordination services for the 14 waiver beneficiaries tested. In our test of 156 claims paid in fiscal year 2024 totaling $30,544 paid to six support coordination providers for the 14 beneficiaries, the support coordination service provider did not provide adequate documentation to support billed services for six claims for two beneficiaries. The federally funded portion of these claims totaled $768.
Criteria:
42 CFR Part 441, Subpart G requires states to operate their HCBS programs with certain assurances, including health and welfare, financial accountability, and evaluation of need. To meet these assurances, states must demonstrate that they have systems to effectively monitor the adequacy of service plans, the qualifications of providers, and the health and welfare of beneficiaries.
Waiver services are accessed through support coordinators who assist with development and monitoring of the beneficiary’s POC.
Auditors used LDH’s provider manuals to identify required documentation, which includes billing codes, an approved POC, time sheets or electronic clock in/out and progress notes. Provider manuals are intended to give a provider the information needed to fulfill its vendor agreement with the State of Louisiana, and is the basis for federal and state reviews of the program.
The beneficiary’s case record is required to include a copy of the approved POC, including any revisions. The POC documents the beneficiary’s assessed needs and types and quantity of services to address those needs and costs related to services. Direct service providers provide care to a beneficiary based on the approved POC.
According to the LDH service coordination provider manual, service logs are the means for clearly documenting services billed and must be reviewed by supervisors.
In addition, in accordance with 42 CFR 441.301(b)(1)(ii), waiver services are not furnished to individuals who are inpatients of a hospital, nursing facility or inpatient care facility for individuals with an intellectual disability.
Cause:
The errors noted in testing occurred because LDH failed to adequately monitor that NOW and ROW waiver and support coordination providers properly maintained adequate records, supporting documentation, and appropriately billed for services.
Effect:
Without adequate documentation a provider cannot substantiate and auditors cannot verify that the departures were beneficiary-driven and person-centered as required.
Without adequate supporting documentation there is reduced assurance that billed services were properly billed, were actually performed, beneficiaries are receiving needed services, and limited resources are allocated appropriately.
Questioned costs totaling $17,402 in federal funds were noted in relation to the waiver services provider and support coordination services provider not providing adequate documentation to support billed services.
Recommendation:
LDH should ensure all departmental policies and federal regulations for waiver and support coordination services are enforced, including documentation to support claims and evidence that departures from the approved POC meet the needs of the beneficiary. LDH should consider additional provider training regarding documentation requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding stating they did not concur with three of the errors noted in the determination of inadequate controls. For the error that management concurred with, a corrective action plan was provided (B-19).
Auditor’s Additional Comments:
LDH noted in their response they did not concur with three of the errors noted in the determination of inadequate controls over waiver and support coordination providers and have concerns with LLA’s overreliance on documentation in determining control adequacy. According to CFR 200.303(a) the recipient must establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. As part of obtaining reasonable assurance that the system of internal control is operating effectively and implemented, documentation supporting these controls is necessary for the auditor to make these determinations. All control mechanisms that were in place, documented, and provided to the auditor were considered.
In addition, LDH noted that there was no error in the departures from the approved POC nor were there errors associated with the claims that were reported as having been billed at the incorrect rate. As stated in the finding, documentation could not be provided to substantiate the reason for the departure from the approved POC for either the number of units or the allocated billing rate per unit.
Finally, LDH noted that while claims were paid for waiver services that overlapped with non-waiver institutional services, there was no error as LDH’s established controls identified and addressed the overlap in billing. The exceptions noted for these claims were a result of LDH not providing sufficient supporting documentation to the auditor showing the recoupment of the payments for the overlapping shifts.
2024-026 - Inadequate Internal Controls over Eligibility Determinations
State Entity: Louisiana Department of Health (LDH)
Award Years: 2022, 2023, 2024
Award Numbers: 2205LA5MAP, 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2023-024)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fifth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medical Assistance Program (Medicaid) and Children’s Health Insurance Program (CHIP) programs for the fiscal year ended June 30, 2024.
From a population of 73,333,570 Medicaid Per-Member-Per-Month (PMPM) and Fee-For-Service (FFS) payments totaling $13.3 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for nineteen (31.67%) out of 60 payments tested.
The following errors were noted for Medicaid:
• For four payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For 11 payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For two payments, LDH did not follow policies to discontinue coverage at the end of the COVID -19 public health emergency for beneficiaries whose citizenship status remained unverified at the end of their reasonable opportunity period. These beneficiaries were therefore not validly enrolled during fiscal year 2024.
• For one payment, LDH failed to continue coverage on a beneficiary who had been determined eligible at renewal, causing a one-month lapse in coverage.
• For one payment, LDH personnel failed to verify Louisiana residency for the initial application on a beneficiary who resided out of state. The beneficiary’s application listed an out of state address in a border city. LDH failed to review the address to verify the exact state of residence, which would have resulted in a denial of coverage. Therefore, the beneficiary was not validly enrolled at initial application in fiscal year 2022.
In addition, from a population of 6,646,797 CHIP PMPM and FFS payments totaling $538 million, a non-statistical sample of 60 CHIP payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for eleven (18.33%) out of 60 payments tested.
The following errors were noted for CHIP:
• For two payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For five payments, issues in the Louisiana Medicaid Eligibility Determination System resulted in inadequate documentation within the case record to support the eligibility redetermination for the beneficiary.
• For three payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For one payment, LDH personnel failed to accurately perform all required eligibility determinations before enrolling the beneficiary, therefore the beneficiary was invalidly enrolled when they initially applied for eligibility in fiscal year 2023.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a beneficiary must meet all eligibility factors and the beneficiary’s case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid Eligibility Manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility determination and redeterminations per the federal regulations and the Medicaid Eligibility Manual.
Effect:
Proper eligibility determination and redetermination are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $28,793 in federal funds were noted in relation to the Medicaid beneficiaries who were invalidly enrolled or whose renewal determination resulted in an erroneous certification of eligibility.
Questioned costs totaling $6,042 in federal funds were noted in relation to the CHIP beneficiary who was invalidly enrolled. We did not note any questioned costs related to the other errors.
Recommendation:
LDH should ensure its employees follow procedures and federal regulations relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding stating they did not concur with one Medicaid and six CHIP errors noted within the finding. For those errors that management concurred with, a corrective action plan was provided (B-24).
Auditor’s Additional Comments:
LDH noted in their response they did not concur with the errors noted for the Medicaid and CHIP renewals related to SNAP or express lane eligibility not being properly documented and indicated that system logs were provided. The LaMEDS log tables were considered by the auditor and no errors in the eligibility determination were reported. The errors noted in the finding relate to a weakness in internal controls as the system bug noted in the case record produced inadequate documentation. In addition, LDH stated in their response they did not concur with one CHIP finding for inadequate documentation regarding income to support the renewal determination. The error noted by the auditor did not relate specifically to the missing affidavit, but that sufficient support was not obtained by LDH to support the change in income from the application.
2024-027 - Noncompliance with and Inadequate Controls over Maternity Kick Payments
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-025)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not adhere to established policies and procedures regarding maternity kick payments for fiscal year 2024. Maternity kick payments are one-time payments made by LDH to reimburse the Healthy Louisiana Managed Care Organizations (MCOs) for the costs associated with pre- and post-partum maternal care, as well as the delivery event itself. These payments are paid to an MCO upon submission of satisfactory evidence of the event or treatment which is referred to as a triggering event.
During the period July 1, 2023, through June 30, 2024, LDH paid out 30,004 Medical Assistance Program (Medicaid) maternity kick payments totaling $307 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all Medicaid maternity kick payments, we identified 21 kick payments totaling $146,584 in federal funds that were paid to the Healthy Louisiana MCOs based on an ineligible triggering event.
During the period July 1, 2023, through June 30, 2024, LDH paid out 4,672 Children’s Health Insurance Program (CHIP) maternity kick payments totaling $47.7 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all CHIP maternity kick payments, we identified three kick payments totaling $26,218 in federal funds that were paid to the Healthy Louisiana MCOs based on an ineligible triggering event.
Criteria:
Louisiana Administrative Code (LAC) Title 50, Part I, Section 3509(A)(5) states MCOs may be reimbursed a one-time supplemental lump sum payment, referred to as a kick payment. The kick payment is intended to cover the cost of a specific care event or treatment. Payment will be made to the MCO upon submission of satisfactory evidence of the event or treatment under Title XIX to the Social Security Act. In accordance with this guidance, LDH policies require an eligible triggering event to occur before a maternity kick payment can be made. LDH procedures also require that a review of kick payments be performed semi-annually.
Cause:
LDH did not adhere to the established policies and procedures regarding maternity kick payments and their reviews in FY 2024 failed to notate the coding error that allowed kick payments to be paid for ineligible triggering events.
Effect:
There is an increased risk that maternity kick payments are being paid to Healthy Louisiana MCOs for triggering events that may not have taken place or do not have satisfactory supporting evidence.
Recommendation:
LDH should strengthen existing policies and procedures to ensure all maternity kick payments are supported with an eligible triggering event before payment is made to the MCOs.
Management’s Response and Corrective Action Plan:
Management did not concur with the finding stating corrective action is not necessary, as recoveries were identified and processed as part of the regularly scheduled review process; however, LDH will modify the timing of its final quarterly reviews to ensure that payment/voids in June do not result in a finding (B-26).
Auditor’s Additional Comments:
As part of LDH’s procedures over maternity kick payments, LDH has an approved set logic in their claims processing system to pay maternity kick payments to MCOs when an eligible triggering event occurs. As LDH noted in their finding response, the errors noted in the finding were due to an error in this logic. While the logic error was discovered in their September 2024 review, adequate internal controls should be in place and operating effectively to ensure the logic is accurate at the time it is applied to transactions. In addition, recovery from the MCO also does not constitute the return of federal funds. While the MCO may have returned the funds to LDH, the funds must then be returned to the federal government on the next quarterly CMS 64 report. LDH did not provide evidence of this return.
2024-028 - Noncompliance with Disproportionate Share Hospital Payments
State Entity: Louisiana Department of Health (LDH)
Award Year: 2024
Award Number: 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
LDH exceeded the federally allocated 2016 Disproportionate Share Hospital (DSH) funding limit by $4,225,716. LDH makes payments to qualifying hospitals that serve a large number of Medical Assistance Program (Medicaid) and uninsured individuals for uncompensated costs. These payments are known as DSH payments.
Criteria:
Section 1923 of the Social Security Act and LDH's State Plan Amendment 4.19 limits DSH payments on a state-wide basis to the annual DSH allotment. The allotment is capped and represents the maximum federal matching payments a state is permitted to claim. The allotment does not have to be spent in the specific allotment year but can be applied indefinitely until completely utilized.
Cause:
The overage occurred due to an inadequate reconciliation between the agency’s actual DSH expenditures and the federal allotment. LDH failed to adequately update their tracking spreadsheet to include all 2016 DSH federal allotment payments that had previously been claimed and federally reimbursed.
Effect:
The 2016 DSH funding limit was exceeded and resulted in $4,225,716 in questioned costs.
Recommendation:
LDH should ensure an adequate review of the tracking spreadsheet to verify that all federal payments are included and to prevent the department from exceeding the federal DSH allotment in the future.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-28).
2024-029 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-026)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the seventh consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 23,170 providers paid during fiscal year 2024, it was determined that 8,209 (35%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medical Assistance Program (Medicaid) agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal launched in fiscal year 2022 for existing providers as of March of 2022, new providers were not invited to enroll as this required an amendment to the contract with Gainwell and additional costs. Therefore, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2024 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-30).
2024-030 - Noncompliance with Medicaid Federal Matching and Reporting Requirements Related to a Means of Financing Reallocation
State Entity: Louisiana Department of Health (LDH)
Award Year: 2024
Award Number: 2405LA5MAP
Compliance Requirements: Matching, Level of Effort, Earmarking; Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
LDH did not have evidence that the state share of Medical Assistance Program (Medicaid) expenditures associated with $248,367,729 of federal expenditures reported on the June 30, 2024 CMS-64 quarterly federal expenditure report were expended using state funds as of the date of the report.
Criteria:
The state is required to pay part of the costs of providing Medicaid services and part of the costs of administering the program. The percentage of federal funding is determined based on the amount of the expenditures and the application of the Federal Medical Assistance Percentage that is determined for each state using a formula outlined in section 1905(b) of the Act (42 USC 1396d). 2 CFR 200.306(b) states that the basic criteria for acceptable matching include that the funds are verifiable from the non-federal entity’s records, are not included as contributions for any other federal award, and are not paid by the federal government under another federal award.
The CMS-64 quarterly federal expenditure report requires the state to certify that the required amount of state and/or local funds were available and used to match the state’s allowable expenditures included in the report, and such state and/or local funds were in accordance with all applicable federal requirements for the non-federal share match of expenditures. The CMS-64 report also requires the state to certify that the expenditures included in the report are based on the state's accounting of actual recorded expenditures.
Cause:
LDH reallocated the means of financing for Medicaid expenditures totaling $118,660,095 from being funded by state funds to federal carryforward funds as of June 30, 2024. As a result, the expenditures were no longer considered eligible state match expenditures, and therefore, the total amount of the Medicaid expenditures (total computable which includes both state and federal shares - $367,027,824) associated with the $118,660,095 should have been excluded from the June 30, 2024 CMS-64 report. However, when LDH prepared the June 30, 2024 CMS-64 report, they only removed the $118,660,095 from the total computable amount.
Effect:
By not removing the full $367,027,824, LDH reported $248,367,729 in Medicaid expenditures on the CMS-64 report that they were unable to provide evidence that the state share of expenditures were funded with allowable sources, resulting in federal questioned costs of $168,070,442.
The certifications attested to by LDH in the CMS-64 report upon submission to CMS were no longer accurate.
Recommendation:
LDH management should strengthen the system of internal controls over preparation and review of the quarterly CMS-64 reports to ensure expenditures are accurately reported and that the required amount of state and/or local funds are available and used to match the state’s allowable expenditures.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-32).
2024-031 - Weakness in Controls over and Noncompliance with Provider Overpayments
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-027)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments. From a population of 77,634 transactions totaling $147.1 million, a non-statistical sample of 59 provider overpayments was selected and tested to determine if LDH complied with the federal regulations regarding the refunding of the federal share of provider overpayments. For one (1.69%) out of 59 provider overpayments selected for testing, there was no supporting documentation available to identify the date of discovery. Therefore, the auditor was unable to ensure the federal share of the overpayment was returned timely.
In addition, LDH did not provide evidence that an adequate review was performed for three out of the four (75%) quarterly CMS-64 Line 9 reconciliations. These reviews ensure provider overpayments are reported timely and on the correct line of the CMS-64 federal expenditure quarterly report.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
In December of 2023, as part of their corrective action plan from fiscal year 2023, LDH updated their policy to require the submitting department/agency to specifically identify the date of discovery when providing provider overpayment information to LDH. Although implementation of the new policy began in fiscal year 2024, the policy was not in effect for 6 months out of the year.
In addition, LDH did not ensure controls over provider overpayments were in place and properly monitored for every quarter during fiscal year 2024.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should strengthen internal controls to ensure compliance with federal regulations regarding the timely return of the federal share of provider overpayment collections.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-34).
2024-035 – Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP)
Award Years: 2008, 2016, 2021, 2022
Award Numbers: 1792-19, 4277-122, 4277-30, 4611-38, EMT-2022-FM-003
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-031)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) did not fully comply with the Federal Funding Accountability and Transparency Act (FFATA) reporting requirements for the Hazard Mitigation Grant (HM) and the Flood Mitigation Assistance (FMA) programs. This is the second consecutive year in which the FMA program was not compliant with FFATA reporting requirements.
Our procedures disclosed the following:
• In a non-statistical sample of 11 HM subawards tested totaling $15,127,069 from a population of 100 subawards totaling $76,083,506 made between July 1, 2023, and June 30, 2024, 4 subawards (36.4%) totaling $3,898,561 were submitted from 54 days to 117 days after the due date specified by federal regulations.
• Of the 15 FMA subawards tested totaling $31,209,266, which was 100% of the subawards made between February 29, 2024, and June 30, 2024, 12 subawards (80%) totaling $21,245,124 were submitted from 115 days to 176 days after the due date specified by federal regulations.
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FFATA Subaward Reporting System (FSRS) no later than the end of the month following the month in which the obligation was made.
Cause:
GOHSEP does not have adequate internal controls to ensure compliance with FFATA reporting requirements.
Effect:
Noncompliance with FFATA reporting requirements prevents the public from having access to accurate and timely information regarding the administration of federal awards.
Recommendation:
GOHSEP should strengthen internal controls to ensure that appropriate personnel are timely entering the required award information for FFATA reporting in accordance with federal requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-7). Management contends that the HM projects selected for the fiscal year 2024 audit were the same HM projects selected in the fiscal year 2023 audit and that the HM entries cited in this finding pre-date the agency’s corrective action. Management also stated that two of the FMA projects selected for the fiscal year 2024 audit were selected in the fiscal year 2023 audit and the remaining 10 projects in question were entered in calendar year 2024 as a part of the agency’s corrective action plan.
Auditor’s Additional Comments:
Submission of data into FSRS is required each time there is an additional obligation or amendment to a qualified project. Therefore, it is possible that a project was reviewed more than once if the project had multiple amendments during the audit period.
The HM program at GOHSEP was not audited for fiscal year 2023, and as such, there was no duplication in items reviewed in the current audit. In addition, because HM is a major federal program for fiscal year 2024, federal guidance requires the auditor to review the agency’s compliance with federal requirements throughout the entirety of the year.
The FMA obligations and/or amendments included in this finding occurred after February 2024, the date of management’s response to the prior year finding. Therefore, the current year finding does not include any FMA obligations or amendments that were previously reported. Also, the current year FMA obligations and amendments reviewed, although they may have been a part of management’s corrective action plan, were still submitted outside the required timeframe for reporting.
2024-035 – Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP)
Award Years: 2008, 2016, 2021, 2022
Award Numbers: 1792-19, 4277-122, 4277-30, 4611-38, EMT-2022-FM-003
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-031)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) did not fully comply with the Federal Funding Accountability and Transparency Act (FFATA) reporting requirements for the Hazard Mitigation Grant (HM) and the Flood Mitigation Assistance (FMA) programs. This is the second consecutive year in which the FMA program was not compliant with FFATA reporting requirements.
Our procedures disclosed the following:
• In a non-statistical sample of 11 HM subawards tested totaling $15,127,069 from a population of 100 subawards totaling $76,083,506 made between July 1, 2023, and June 30, 2024, 4 subawards (36.4%) totaling $3,898,561 were submitted from 54 days to 117 days after the due date specified by federal regulations.
• Of the 15 FMA subawards tested totaling $31,209,266, which was 100% of the subawards made between February 29, 2024, and June 30, 2024, 12 subawards (80%) totaling $21,245,124 were submitted from 115 days to 176 days after the due date specified by federal regulations.
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FFATA Subaward Reporting System (FSRS) no later than the end of the month following the month in which the obligation was made.
Cause:
GOHSEP does not have adequate internal controls to ensure compliance with FFATA reporting requirements.
Effect:
Noncompliance with FFATA reporting requirements prevents the public from having access to accurate and timely information regarding the administration of federal awards.
Recommendation:
GOHSEP should strengthen internal controls to ensure that appropriate personnel are timely entering the required award information for FFATA reporting in accordance with federal requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-7). Management contends that the HM projects selected for the fiscal year 2024 audit were the same HM projects selected in the fiscal year 2023 audit and that the HM entries cited in this finding pre-date the agency’s corrective action. Management also stated that two of the FMA projects selected for the fiscal year 2024 audit were selected in the fiscal year 2023 audit and the remaining 10 projects in question were entered in calendar year 2024 as a part of the agency’s corrective action plan.
Auditor’s Additional Comments:
Submission of data into FSRS is required each time there is an additional obligation or amendment to a qualified project. Therefore, it is possible that a project was reviewed more than once if the project had multiple amendments during the audit period.
The HM program at GOHSEP was not audited for fiscal year 2023, and as such, there was no duplication in items reviewed in the current audit. In addition, because HM is a major federal program for fiscal year 2024, federal guidance requires the auditor to review the agency’s compliance with federal requirements throughout the entirety of the year.
The FMA obligations and/or amendments included in this finding occurred after February 2024, the date of management’s response to the prior year finding. Therefore, the current year finding does not include any FMA obligations or amendments that were previously reported. Also, the current year FMA obligations and amendments reviewed, although they may have been a part of management’s corrective action plan, were still submitted outside the required timeframe for reporting.
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-008 - Noncompliance with Subrecipient Monitoring Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2019 - 2023
Award Numbers: DE-EE0009421, FA9550-21-1-0215, M19AC00015, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-008)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, UL Lafayette did not adequately monitor subrecipients of the Research and Development (R&D) Cluster Programs. In a non-statistical sample of seven subawards out of a population of 50 subawards, it was noted that for six (85.7%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For three (42.9%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the required risk analyses were performed to evaluate each subrecipients’ fraud risk and risk of noncompliance with federal regulations and the terms of the subaward. For two of the subrecipients reviewed (28.6%), UL Lafayette was unable to provide documentation that ensured each subrecipient obtained the required audit and that the audit was reviewed so that timely and appropriate action could be taken for any findings pertaining to the federal awards, as required by federal regulations. Additionally, for one (14.3%) of the subrecipients evaluated, the subaward documents did not contain the federal award date as required by federal regulations.
Criteria:
Per 2 CFR 200.332(b)(1)(iv), all pass-through entities must ensure that every subaward includes the federal award date.
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient's fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2 CFR 200.332(e)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
2 CFR 200.332(e)(2) and (3) require pass-through entities to issue a management decision on applicable audit findings, in accordance with 2 CFR 200.521, within six months after acceptance of the subrecipient’s audit report by the Federal Audit Clearinghouse, and ensure that the subrecipient takes timely and appropriate corrective action on all findings.
Per 2 CFR 200.332(g), pass-through entities are responsible for verifying that every subrecipient is audited as required by 2 CFR Part 200, subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in CFR 200.501 of $750,000 or more in federal awards during the subrecipient’s fiscal year.
Cause:
UL Lafayette did not have sufficient controls in place to adequately monitor subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that all required financial and performance reports are obtained and reviewed and that all required subrecipient audit reports are obtained and reviewed in order to evaluate the impact of any findings noted by the audit and issue management decision letters, if applicable. In addition, UL Lafayette should strengthen controls to ensure that required information is included in the subaward documents and that risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-64).
2024-009 – Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Executive Department – Division of Administration – Office of Community Development
Award Years: 2016, 2021, 2023
Award Numbers: B-16-DL-22-0001, B-21-DF-22-0001, B-21-DZ-22-0001, B-23-DC-22-0001
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Division of Administration, Office of Community Development – Local Government Assistance (OCD-LGA) and Office of Community Development-Disaster Recovery (OCD-DR) did not comply with Federal Funding Accountability and Transparency Act (FFATA) Reporting requirements for the Community Development Block Grant/State’s Program (CDBG). During fiscal year 2024, OCD-LGA approved 41 subawards totaling approximately $22 million to 40 different subrecipients, and OCD-DR approved 33 subawards totaling approximately $310.9 million to 32 different subrecipients. Our procedures identified the following:
• In a sample of eight OCD-LGA subawards, none of the eight subaward obligations were reported in the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS) until 39 to 62 days after the required time frame.
• Of the 10 OCD-DR subawards tested, four obligations reported in FSRS were not reported until 5 to 86 days after the required time frame.
See Schedule of Findings and Questioned Costs for chart/table.
Criteria:
2 CFR Part 170, Appendix A, requires the non-federal entity to report to FSRS each obligating action equal to or exceeding $30,000 for a subaward. In addition, the subaward information must be reported no later than the end of the month following the month in which the obligation was made. 2 CFR Part 200.303 requires that non-federal entities receiving federal awards establish and maintain internal control over the federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with relevant requirements.
Cause:
OCD-LGA management stated that they were unable to submit the reports in FSRS timely. OCD-DR management stated that the infrequency of preparation of the FFATA reports caused the required FFATA reports to be submitted untimely to FSRS. Both OCD-LGA and OCD-DR did not maintain adequate internal controls to ensure compliance with FFATA reporting requirements.
Effect:
Not complying with the FFATA requirements increases the likelihood that the public will not have access to transparent and accurate information regarding OCD-LGA and OCD-DR’s administration of federal awards.
Recommendation:
OCD-LGA and OCD-DR management should ensure that established internal controls are operating to ensure compliance with FFATA reporting requirements, which includes the timely submission of information.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-6).
2024-008 - Noncompliance with Subrecipient Monitoring Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2019 - 2023
Award Numbers: DE-EE0009421, FA9550-21-1-0215, M19AC00015, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-008)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, UL Lafayette did not adequately monitor subrecipients of the Research and Development (R&D) Cluster Programs. In a non-statistical sample of seven subawards out of a population of 50 subawards, it was noted that for six (85.7%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For three (42.9%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the required risk analyses were performed to evaluate each subrecipients’ fraud risk and risk of noncompliance with federal regulations and the terms of the subaward. For two of the subrecipients reviewed (28.6%), UL Lafayette was unable to provide documentation that ensured each subrecipient obtained the required audit and that the audit was reviewed so that timely and appropriate action could be taken for any findings pertaining to the federal awards, as required by federal regulations. Additionally, for one (14.3%) of the subrecipients evaluated, the subaward documents did not contain the federal award date as required by federal regulations.
Criteria:
Per 2 CFR 200.332(b)(1)(iv), all pass-through entities must ensure that every subaward includes the federal award date.
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient's fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2 CFR 200.332(e)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
2 CFR 200.332(e)(2) and (3) require pass-through entities to issue a management decision on applicable audit findings, in accordance with 2 CFR 200.521, within six months after acceptance of the subrecipient’s audit report by the Federal Audit Clearinghouse, and ensure that the subrecipient takes timely and appropriate corrective action on all findings.
Per 2 CFR 200.332(g), pass-through entities are responsible for verifying that every subrecipient is audited as required by 2 CFR Part 200, subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in CFR 200.501 of $750,000 or more in federal awards during the subrecipient’s fiscal year.
Cause:
UL Lafayette did not have sufficient controls in place to adequately monitor subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that all required financial and performance reports are obtained and reviewed and that all required subrecipient audit reports are obtained and reviewed in order to evaluate the impact of any findings noted by the audit and issue management decision letters, if applicable. In addition, UL Lafayette should strengthen controls to ensure that required information is included in the subaward documents and that risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-64).
2024-010 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
State Entity: Louisiana Workforce Commission (LWC)
Award Years: 2021 - 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-012)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the Federal Audit Clearinghouse (FAC) and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs. LWC’s total WIOA expenditures during state fiscal year 2024 totaled more than $50 million, with approximately $40.7 million provided to subrecipients.
Our review of LWC’s monitoring of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• Three Single Audit reports were submitted to the FAC between 7 and 64 days after the deadline set by federal regulations.
• For an additional three Single Audit reports, each with findings affecting the WIOA cluster of programs, management decision letters were issued between 148 and 216 days after the deadline set by federal regulations.
Criteria:
2 CFR 200.512(a) requires that Single Audit reports be submitted within the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients.
2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the FAC.
Cause:
LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the FAC and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs.
Effect:
Failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted and required management decision letters are issued by the deadlines established in federal regulations impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor.
Recommendation:
LWC management should implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted to the FAC in a timely manner and required management decision letters are issued by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-50).
2024-011 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Louisiana Workforce Commission (LWC)
Award Year: 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-013)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, for Workforce Innovation and Opportunity Act (WIOA) Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS) website required for federal subawards by FFATA.
LWC had 15 subawards totaling $35.7 million executed in state fiscal year 2024. The data submissions for 11 of the 15 subawards occurred between one and two months after the due date specified by federal regulations. The 11 subawards submitted late each exceeded $30,000 and collectively totaled more than $25.2 million. In addition, LWC entered into the FSRS website an incorrect subaward amount for two subawards. The error resulted in an underreporting of the subawards totaling $79,207.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170, Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
The amount of the subaward is one of the key data elements identified by federal regulations for FFATA data submissions.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submission. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations and included erroneous amounts for two subawards.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late and erroneous data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-52).
2024-010 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
State Entity: Louisiana Workforce Commission (LWC)
Award Years: 2021 - 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-012)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the Federal Audit Clearinghouse (FAC) and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs. LWC’s total WIOA expenditures during state fiscal year 2024 totaled more than $50 million, with approximately $40.7 million provided to subrecipients.
Our review of LWC’s monitoring of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• Three Single Audit reports were submitted to the FAC between 7 and 64 days after the deadline set by federal regulations.
• For an additional three Single Audit reports, each with findings affecting the WIOA cluster of programs, management decision letters were issued between 148 and 216 days after the deadline set by federal regulations.
Criteria:
2 CFR 200.512(a) requires that Single Audit reports be submitted within the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients.
2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the FAC.
Cause:
LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the FAC and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs.
Effect:
Failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted and required management decision letters are issued by the deadlines established in federal regulations impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor.
Recommendation:
LWC management should implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted to the FAC in a timely manner and required management decision letters are issued by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-50).
2024-011 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Louisiana Workforce Commission (LWC)
Award Year: 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-013)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, for Workforce Innovation and Opportunity Act (WIOA) Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS) website required for federal subawards by FFATA.
LWC had 15 subawards totaling $35.7 million executed in state fiscal year 2024. The data submissions for 11 of the 15 subawards occurred between one and two months after the due date specified by federal regulations. The 11 subawards submitted late each exceeded $30,000 and collectively totaled more than $25.2 million. In addition, LWC entered into the FSRS website an incorrect subaward amount for two subawards. The error resulted in an underreporting of the subawards totaling $79,207.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170, Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
The amount of the subaward is one of the key data elements identified by federal regulations for FFATA data submissions.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submission. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations and included erroneous amounts for two subawards.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late and erroneous data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-52).
2024-010 - Inadequate Controls over and Noncompliance with Subrecipient Monitoring Requirements
State Entity: Louisiana Workforce Commission (LWC)
Award Years: 2021 - 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034, AA363222155A22, AA385322255A22
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-012)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, the Louisiana Workforce Commission (LWC) did not adequately monitor subrecipients under the Workforce Innovation and Opportunity Act (WIOA) Cluster programs. LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the Federal Audit Clearinghouse (FAC) and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs. LWC’s total WIOA expenditures during state fiscal year 2024 totaled more than $50 million, with approximately $40.7 million provided to subrecipients.
Our review of LWC’s monitoring of Single Audit reports disclosed the following for LWC’s 15 subrecipients:
• Three Single Audit reports were submitted to the FAC between 7 and 64 days after the deadline set by federal regulations.
• For an additional three Single Audit reports, each with findings affecting the WIOA cluster of programs, management decision letters were issued between 148 and 216 days after the deadline set by federal regulations.
Criteria:
2 CFR 200.512(a) requires that Single Audit reports be submitted within the earlier of 30 calendar days after receipt of the auditor’s report or nine months after the end of the audit period.
2 CFR 200.521(c) requires that pass-through entities issue management decisions for audit findings related to federal awards they make to subrecipients.
2 CFR 200.521(d) requires that pass-through entities responsible for issuing management decisions issue their management decisions within six months of the acceptance of the audit report by the FAC.
Cause:
LWC did not ensure that subrecipients’ Single Audit reports were submitted timely to the FAC and ensure timely issuance of management decisions on findings affecting the WIOA Cluster programs.
Effect:
Failure to implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted and required management decision letters are issued by the deadlines established in federal regulations impairs LWC’s ability to ensure that program funds passed through to its subrecipients were spent in accordance with program regulations and increases the risk of improper payments to subrecipients, which LWC may have to repay to the federal grantor.
Recommendation:
LWC management should implement adequate internal controls to ensure that subrecipients’ Single Audit reports are submitted to the FAC in a timely manner and required management decision letters are issued by the due date set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-50).
2024-011 - Noncompliance and Inadequate Controls Related to Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Louisiana Workforce Commission (LWC)
Award Year: 2024
Award Numbers: 23A55AT000024, 23A55AW000027, 23A55AY000034
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-013)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, for Workforce Innovation and Opportunity Act (WIOA) Cluster programs, LWC did not have adequate internal controls in place to review and approve data submissions to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS) website required for federal subawards by FFATA.
LWC had 15 subawards totaling $35.7 million executed in state fiscal year 2024. The data submissions for 11 of the 15 subawards occurred between one and two months after the due date specified by federal regulations. The 11 subawards submitted late each exceeded $30,000 and collectively totaled more than $25.2 million. In addition, LWC entered into the FSRS website an incorrect subaward amount for two subawards. The error resulted in an underreporting of the subawards totaling $79,207.
Criteria:
2 CFR 200.303 requires non-federal entities receiving federal award to establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal award.
2 CFR 170, Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FSRS website no later than the end of the month following the month in which the obligation was made.
The amount of the subaward is one of the key data elements identified by federal regulations for FFATA data submissions.
Cause:
LWC management represented that a staff member, other than the compiler of the data that was submitted, observed the data as it was being submitted to the FSRS website and reviewed and approved it as complete and accurate based on this observation. However, management was not able to provide evidence of the review and approval of the data submission. In addition, as noted above, the data submissions occurred after the due date specified in federal regulations and included erroneous amounts for two subawards.
Effect:
Failure to implement adequate internal controls over the data submissions to the FSRS website as required by the FFATA could result in required data submissions being incomplete, inaccurate, and/or untimely, as evidenced by the late and erroneous data submissions noted above, which resulted in noncompliance with federal regulations.
Recommendation:
LWC should strengthen controls, including maintaining evidence of reviews, to ensure compliance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-52).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024 -007 - Noncompliance with Period of Performance Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2021, 2022
Award Numbers: 80NSSC21M0165, DE-FE0031919
Compliance Requirement: Period of Performance
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
UL Lafayette did not ensure that all expenses charged to federal Research and Development (R&D) awards complied with the period of performance requirements.
From a population of 166 R&D grants with expenses totaling $6,720,454 and periods of performance starting or ending during the fiscal year ending June 30, 2024, a non-statistical sample of 17 grants was tested for compliance with period of performance requirements. For two (11.8%) of the 17 grants tested, expenses totaling $63,790 were identified as noncompliant with the period of performance requirements. One grant had expenses totaling $28,833 that were incurred after the period of performance. For the other grant, UL Lafayette failed to liquidate obligations totaling $34,957 incurred during the period of performance within 120 days after the end the period of performance as required by federal regulations.
Criteria:
A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance [2 CFR sections 200.308, 200.309, and 200.403(h)].
Additionally, 2 CFR 200.344 states that the recipient must liquidate all financial obligations incurred under the federal award no later than 120 calendar days after the conclusion of the period of performance.
Cause:
UL Lafayette did not have sufficient internal controls to ensure that only expenses incurred during the period of performance were charged to R&D grants and that obligations were liquidated timely.
Effect:
Noncompliance with the period of performance requirements resulted in $63,790 in questioned costs and increases the risk that expenses could be disallowed and not reimbursed by the awarding agency.
Recommendation:
Management should strengthen their procedures and internal controls that are in place to ensure that all expenses incurred on federal R&D grants comply with the period of performance requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-62).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2020, 2021, 2022
Award Numbers: 1R01MH125395, 2046460, R37AI094595
Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions
Pass-Through Entity: Northwestern University
Repeat Finding: Yes (Prior Year Finding No. 2023-007)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed.
From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-60).
2024-008 - Noncompliance with Subrecipient Monitoring Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2019 - 2023
Award Numbers: DE-EE0009421, FA9550-21-1-0215, M19AC00015, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-008)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, UL Lafayette did not adequately monitor subrecipients of the Research and Development (R&D) Cluster Programs. In a non-statistical sample of seven subawards out of a population of 50 subawards, it was noted that for six (85.7%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For three (42.9%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the required risk analyses were performed to evaluate each subrecipients’ fraud risk and risk of noncompliance with federal regulations and the terms of the subaward. For two of the subrecipients reviewed (28.6%), UL Lafayette was unable to provide documentation that ensured each subrecipient obtained the required audit and that the audit was reviewed so that timely and appropriate action could be taken for any findings pertaining to the federal awards, as required by federal regulations. Additionally, for one (14.3%) of the subrecipients evaluated, the subaward documents did not contain the federal award date as required by federal regulations.
Criteria:
Per 2 CFR 200.332(b)(1)(iv), all pass-through entities must ensure that every subaward includes the federal award date.
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient's fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2 CFR 200.332(e)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
2 CFR 200.332(e)(2) and (3) require pass-through entities to issue a management decision on applicable audit findings, in accordance with 2 CFR 200.521, within six months after acceptance of the subrecipient’s audit report by the Federal Audit Clearinghouse, and ensure that the subrecipient takes timely and appropriate corrective action on all findings.
Per 2 CFR 200.332(g), pass-through entities are responsible for verifying that every subrecipient is audited as required by 2 CFR Part 200, subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in CFR 200.501 of $750,000 or more in federal awards during the subrecipient’s fiscal year.
Cause:
UL Lafayette did not have sufficient controls in place to adequately monitor subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that all required financial and performance reports are obtained and reviewed and that all required subrecipient audit reports are obtained and reviewed in order to evaluate the impact of any findings noted by the audit and issue management decision letters, if applicable. In addition, UL Lafayette should strengthen controls to ensure that required information is included in the subaward documents and that risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-64).
2024-008 - Noncompliance with Subrecipient Monitoring Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2019 - 2023
Award Numbers: DE-EE0009421, FA9550-21-1-0215, M19AC00015, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-008)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, UL Lafayette did not adequately monitor subrecipients of the Research and Development (R&D) Cluster Programs. In a non-statistical sample of seven subawards out of a population of 50 subawards, it was noted that for six (85.7%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For three (42.9%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the required risk analyses were performed to evaluate each subrecipients’ fraud risk and risk of noncompliance with federal regulations and the terms of the subaward. For two of the subrecipients reviewed (28.6%), UL Lafayette was unable to provide documentation that ensured each subrecipient obtained the required audit and that the audit was reviewed so that timely and appropriate action could be taken for any findings pertaining to the federal awards, as required by federal regulations. Additionally, for one (14.3%) of the subrecipients evaluated, the subaward documents did not contain the federal award date as required by federal regulations.
Criteria:
Per 2 CFR 200.332(b)(1)(iv), all pass-through entities must ensure that every subaward includes the federal award date.
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient's fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2 CFR 200.332(e)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
2 CFR 200.332(e)(2) and (3) require pass-through entities to issue a management decision on applicable audit findings, in accordance with 2 CFR 200.521, within six months after acceptance of the subrecipient’s audit report by the Federal Audit Clearinghouse, and ensure that the subrecipient takes timely and appropriate corrective action on all findings.
Per 2 CFR 200.332(g), pass-through entities are responsible for verifying that every subrecipient is audited as required by 2 CFR Part 200, subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in CFR 200.501 of $750,000 or more in federal awards during the subrecipient’s fiscal year.
Cause:
UL Lafayette did not have sufficient controls in place to adequately monitor subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that all required financial and performance reports are obtained and reviewed and that all required subrecipient audit reports are obtained and reviewed in order to evaluate the impact of any findings noted by the audit and issue management decision letters, if applicable. In addition, UL Lafayette should strengthen controls to ensure that required information is included in the subaward documents and that risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-64).
2024 -007 - Noncompliance with Period of Performance Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2021, 2022
Award Numbers: 80NSSC21M0165, DE-FE0031919
Compliance Requirement: Period of Performance
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
UL Lafayette did not ensure that all expenses charged to federal Research and Development (R&D) awards complied with the period of performance requirements.
From a population of 166 R&D grants with expenses totaling $6,720,454 and periods of performance starting or ending during the fiscal year ending June 30, 2024, a non-statistical sample of 17 grants was tested for compliance with period of performance requirements. For two (11.8%) of the 17 grants tested, expenses totaling $63,790 were identified as noncompliant with the period of performance requirements. One grant had expenses totaling $28,833 that were incurred after the period of performance. For the other grant, UL Lafayette failed to liquidate obligations totaling $34,957 incurred during the period of performance within 120 days after the end the period of performance as required by federal regulations.
Criteria:
A non-federal entity may charge only allowable costs incurred during the approved budget period of a federal award’s period of performance [2 CFR sections 200.308, 200.309, and 200.403(h)].
Additionally, 2 CFR 200.344 states that the recipient must liquidate all financial obligations incurred under the federal award no later than 120 calendar days after the conclusion of the period of performance.
Cause:
UL Lafayette did not have sufficient internal controls to ensure that only expenses incurred during the period of performance were charged to R&D grants and that obligations were liquidated timely.
Effect:
Noncompliance with the period of performance requirements resulted in $63,790 in questioned costs and increases the risk that expenses could be disallowed and not reimbursed by the awarding agency.
Recommendation:
Management should strengthen their procedures and internal controls that are in place to ensure that all expenses incurred on federal R&D grants comply with the period of performance requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-62).
2024-012 – Failure to Return Title IV Funds in Required Time Frames
State Entity: Louisiana State University at Shreveport (LSU-S)
Award Years: 2015 - 2024
Award Numbers: P063P191517, P063P201517, P063P211517, P063P221517, P063P231517, P268K201517, P268K211517, P268K221517, P268K231517, P268K241517
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
Louisiana State University at Shreveport (LSU-S) failed to return Title IV funds to the U.S. Department of Education (USDOE) within the required timeframes. In January 2025, management identified $101,159 of outstanding checks to students or parents, issued from September 2014 to May 2024, that were not returned to the USDOE as required by federal regulations.
Criteria:
Per 34 CFR 668.164(l):
(1) Notwithstanding any state law (such as a law that allows funds to escheat to the state), an institution must return to the Secretary any Title IV, Health Education Act program funds, except Federal Work Study (FWS) program funds, that it attempts to disburse directly to a student or parent that are not received by the student or parent. For FWS program funds, the institution is required to return only the federal portion of the payroll disbursement.
(2) If an electronic funds transfer (EFT) to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the secretary before the end of this 45-day period.
(3) If a check sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the secretary no later than 240 days after the date it issued the check.
Cause:
Management represented that their practice is to follow-up with the student or parent and encourage them to deposit their checks, but there are no procedures in place to follow-up and ensure the funds are returned to the USDOE within the required timeframe.
Effect:
Failure to timely return Title IV funds to the USDOE results in noncompliance with federal regulations and could result in disallowed costs.
Recommendation:
Management should develop and implement a process to return all Title IV funds that are not received by a student or parent to the USDOE within the required timeframes set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-39).
2024-013 – Noncompliance with Gramm-Leach-Bliley Act Regarding Student Information Security
State Entity: Louisiana State University at Shreveport (LSU-S)
Award Years: 2023, 2024
Award Numbers: P063P221517, P063P231517, P268K231517, P268K241517
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
LSU-S did not develop, implement, and maintain a comprehensive information security program to address the minimum requirements of the Gramm-Leach-Bliley Act standards for safeguarding student information.
Criteria:
The Gramm-Leach-Bliley Act (Pub. L. No. 106-102) requires institutions that participate in Title IV Educational Assistance Programs to safeguard customers’ sensitive data in accordance with 16 CFR 314.
16 CFR 314.3 requires institutions to develop, implement, and maintain a comprehensive information security program that contains administrative, technical, and physical safeguards that are appropriate for the university. The information security program should include certain elements required by federal regulations reasonably designed to:
• insure the security and confidentiality of customer information;
• protect against any anticipated threats or hazards to the security or integrity of such information; and
• protect against unauthorized access of such information that could result in substantial harm or inconvenience to any customer.
Cause:
Management represents that it has prepared a draft information security program policy statement but acknowledges that the policies have not been finalized or implemented.
Effect:
Failure to meet the minimum requirements of the Gramm-Leach-Bliley Act increases the risk of unauthorized disclosure, misuse, alteration, destruction or other compromise of student information and results in noncompliance with federal regulations.
Recommendation:
Management should develop, implement, and maintain an information security program to insure the security and confidentiality of student information and to protect against any anticipated threats or hazards to the security or integrity of such information.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-40).
2024-016 - Control Weakness over and Noncompliance with Enrollment Reporting
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
Southern University at Baton Rouge (SUBR) did not ensure changes in enrollment status for students who received Federal Pell Grant Program funds and/or Federal Direct Student Loans were accurately and timely reported to the National Student Loan Data System (NSLDS), as required by federal regulations.
In a non-statistical sample of 60 students tested for changes in enrollment status from a population of 1,124 students, the following was identified:
• 17 (28%) students had incorrect enrollment information. Six students had an NSLDS program length that did not agree to the SUBR catalog, and 11 students had incorrect enrollment statuses reported.
• 27 (45%) students did not have their enrollment changes correctly updated within 60 days.
Criteria:
34 CFR 685.309(b)(2), related to Federal Direct Student Loans, requires, unless it expects to submit its next updated enrollment report to the U.S. Department of Education (USDOE) within the next 60 days, a school must notify the USDOE within 30 days after the date the school discovers that a loan under Title IV of the Act was made to or on behalf of a student who was enrolled or accepted for enrollment at the school, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended.
34 CFR 690.83(b)(2), related to the Federal Pell Grant Program, requires an institution to submit, in accordance with deadline dates established by the USDOE through publication in the Federal Register, other reports and information the USDOE requires and to comply with the procedures the USDOE finds necessary to ensure that the reports are correct. The section titled Deadline Dates for Enrollment Reporting by Institutions in the Federal Register (88 FR 41092) refers to the NSLDS Enrollment Reporting Guide. The NSLDS Enrollment Reporting Guide, section 1.4, requires the institution to certify enrollment every 60 days.
Cause:
SUBR did not have proper controls in place to ensure changes in enrollment status for students who received Federal Pell Grant Program funds and Federal Direct Student Loan funds were accurately and timely reported to NSLDS. In addition, when SUBR attempted to submit the enrollment report, there was a file structure error preventing the data from being submitted timely.
Effect:
Inaccurate and untimely reporting of changes in enrollment status could impact the student’s Pell Grant or student loan eligibility and result in noncompliance with federal regulations. For students moving into repayment, reporting of changes in enrollment status affects when the grace period begins and how soon a student must begin repaying loan funds.
Recommendation:
Management should strengthen its procedures over changes in enrollment status for students receiving Federal Pell Grant Program funds and Federal Direct Student Loans to ensure SUBR reports accurate and timely information to NSLDS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-54).
2024-017 - Control Weakness over and Noncompliance with Return of Title IV Funds
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
SUBR did not have adequate controls in place to ensure that the return of Title IV funds were properly calculated and returned to the U.S. Department of Education (USDOE) as required by federal regulations. In addition, post-withdrawal disbursement requirements for Title IV funds were not followed.
In a non-statistical sample of 60 students for the Fall 2023 and Spring 2024 semesters, from a population of 456 students who received Title IV funding and ceased attendance or never began attendance, the following was noted:
• For 16 students (27%), SUBR did not perform a return of Title IV funds calculation because the students were incorrectly identified as enrolled rather than unofficially withdrawn, which resulted in $39,183 of Title IV funds not being returned to the USDOE.
• For two students (3%), SUBR used incorrect withdrawal dates in the return of Title IV calculation, which resulted in one of the students requiring a Title IV return of $372.
• For three students (5%), SUBR did not follow the requirements for post-withdrawal disbursements of grant funds by not providing timely notification of the post-withdrawal disbursement to the student or parent.
Criteria:
34 CFR 668.22(a)(1) requires the institution to determine the amount of Title IV funds that the student earned as of the student’s withdrawal date. 34 CFR 668.22(e)(4) requires the institution to calculate the amount of unearned Title IV assistance to be returned. 34 CFR 668.22(j) requires the institution to return unearned Title IV funds within 45 days of the determination date of withdrawal, and to determine the date of withdrawal within 30 days after the end of the period of enrollment.
Per 34 CFR 668.22(a)(6)(iii)(A), for post withdrawal disbursements, a written notification must be provided to the student or parent within 30 days of the date of the institution’s determination that the student withdrew.
34 CFR 668.22(e)(2) the percentage of Title IV funds earned by the student is equal to the percentage of the period of enrollment that the student completed if this date occurs on or before completion of 60 percent of the period of enrollment.
Cause:
SUBR did not follow its procedures to unofficially withdraw students who stopped attending classes prior to completing 60% of the semester. Also, instructors entered conflicting information for students’ final grade and/or students’ last day of attendance. In addition, federal guidelines were not followed when making a post withdrawal disbursement.
Effect:
Failure to return Title IV funds, prepare accurate calculations, and follow requirements related to post withdrawal disbursements resulted in noncompliance with federal regulations and increases the risk that federal funds will be required to be returned to the federal grantor. Audit procedures identified $39,555 that SUBR did not return to the USDOE, which are considered questioned costs.
Recommendation:
Management should strengthen controls to ensure that funds are returned timely to the USDOE, ensure that all return of Title IV funds calculations are performed accurately, and federal guidance for post withdrawal disbursements is followed. In addition, management should ensure instructors submit accurate grade and attendance information in order to determine a student’s correct enrollment status and last day of attendance.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-56).
2024-018 - Inadequate Internal Controls and Noncompliance with Cash Management Requirements
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Cash Management
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
SUBR did not comply with federal regulations regarding the timely return of excess Title IV funds. In our audit procedures for the fiscal year ended June 30, 2024, we noted SUBR overdrew $9.7 million in Federal Direct Student Loan funds on September 18, 2023, as the amount drawn exceeded what was needed for immediate loan disbursements to students. However, total Title IV funds were not overdrawn as there was also an under draw of the Federal Pell Grant Program (Pell). The overdraw on September 18, 2023, did not cause SUBR to have excess cash until Pell funds were drawn on September 29, 2023. Federal regulations consider an institution to have excess cash if those funds are not distributed within three business days of the draw. At the end of the third business day subsequent to the draw on September 29, 2023, SUBR had excess cash of approximately $2 million in Title IV funding. The excess cash was later detected by SUBR and refunded to the U.S. Department of Education (USDOE) on November 4, 2023; therefore, no questioned costs existed at fiscal year-end.
Criteria:
Per 34 CFR 668.162(b), under the advance payment method, an institution submits a request for funds to the USDOE. The institution’s request may not exceed the amount of funds the institution needs immediately for disbursements the institution has made or will make to eligible students and parents.
Per 34 CFR 668.166(a), USDOE considers excess cash to be any amount of Title IV program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution received those funds from the USDOE.
Cause:
Due to a weakness in internal controls over drawdowns of Title IV funds, SUBR drew funds from Federal Direct Student Loans on September 18, 2023, but a portion of these funds should have been drawn from the Federal Pell Grant Program. Although SUBR has a reconciliation process, it is not suitably designed to timely detect overdraws for Title IV programs.
Effect:
Failure to implement sufficient controls over cash management requirements resulted in an overdraw of Title IV funds and noncompliance with cash management regulations.
Recommendation:
Management should strengthen its procedures over the drawing of Title IV funds to ensure timely compliance with federal cash management requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-58).
2024-012 – Failure to Return Title IV Funds in Required Time Frames
State Entity: Louisiana State University at Shreveport (LSU-S)
Award Years: 2015 - 2024
Award Numbers: P063P191517, P063P201517, P063P211517, P063P221517, P063P231517, P268K201517, P268K211517, P268K221517, P268K231517, P268K241517
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
Louisiana State University at Shreveport (LSU-S) failed to return Title IV funds to the U.S. Department of Education (USDOE) within the required timeframes. In January 2025, management identified $101,159 of outstanding checks to students or parents, issued from September 2014 to May 2024, that were not returned to the USDOE as required by federal regulations.
Criteria:
Per 34 CFR 668.164(l):
(1) Notwithstanding any state law (such as a law that allows funds to escheat to the state), an institution must return to the Secretary any Title IV, Health Education Act program funds, except Federal Work Study (FWS) program funds, that it attempts to disburse directly to a student or parent that are not received by the student or parent. For FWS program funds, the institution is required to return only the federal portion of the payroll disbursement.
(2) If an electronic funds transfer (EFT) to a student's or parent's financial account is rejected, or a check to a student or parent is returned, the institution may make additional attempts to disburse the funds, provided that those attempts are made not later than 45 days after the EFT was rejected or the check returned. In cases where the institution does not make another attempt, the funds must be returned to the secretary before the end of this 45-day period.
(3) If a check sent to a student or parent is not returned to the institution but is not cashed, the institution must return the funds to the secretary no later than 240 days after the date it issued the check.
Cause:
Management represented that their practice is to follow-up with the student or parent and encourage them to deposit their checks, but there are no procedures in place to follow-up and ensure the funds are returned to the USDOE within the required timeframe.
Effect:
Failure to timely return Title IV funds to the USDOE results in noncompliance with federal regulations and could result in disallowed costs.
Recommendation:
Management should develop and implement a process to return all Title IV funds that are not received by a student or parent to the USDOE within the required timeframes set by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-39).
2024-013 – Noncompliance with Gramm-Leach-Bliley Act Regarding Student Information Security
State Entity: Louisiana State University at Shreveport (LSU-S)
Award Years: 2023, 2024
Award Numbers: P063P221517, P063P231517, P268K231517, P268K241517
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
LSU-S did not develop, implement, and maintain a comprehensive information security program to address the minimum requirements of the Gramm-Leach-Bliley Act standards for safeguarding student information.
Criteria:
The Gramm-Leach-Bliley Act (Pub. L. No. 106-102) requires institutions that participate in Title IV Educational Assistance Programs to safeguard customers’ sensitive data in accordance with 16 CFR 314.
16 CFR 314.3 requires institutions to develop, implement, and maintain a comprehensive information security program that contains administrative, technical, and physical safeguards that are appropriate for the university. The information security program should include certain elements required by federal regulations reasonably designed to:
• insure the security and confidentiality of customer information;
• protect against any anticipated threats or hazards to the security or integrity of such information; and
• protect against unauthorized access of such information that could result in substantial harm or inconvenience to any customer.
Cause:
Management represents that it has prepared a draft information security program policy statement but acknowledges that the policies have not been finalized or implemented.
Effect:
Failure to meet the minimum requirements of the Gramm-Leach-Bliley Act increases the risk of unauthorized disclosure, misuse, alteration, destruction or other compromise of student information and results in noncompliance with federal regulations.
Recommendation:
Management should develop, implement, and maintain an information security program to insure the security and confidentiality of student information and to protect against any anticipated threats or hazards to the security or integrity of such information.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-40).
2024-014 - Control Weakness over Direct Loans Monthly Reconciliations
State Entity: Louisiana State University Health Sciences Center – New Orleans (LSUHSC-NO)
Award Year: 2024
Award Number: P268K241518
Compliance Requirement: Cash Management
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
Louisiana State University Health Sciences Center – New Orleans (LSUHSC-NO) did not timely reconcile the U.S. Department of Education’s (USDOE) loan information to the institution’s financial records on a monthly basis for the Federal Direct Student Loans program. Each month, USDOE’s Common Origination and Disbursement (COD) system provides the institution the School Account Statement data files, which should reconcile back to USDOE’s grants management system (G5 system) Draw Down reports and the institution’s financial records to ensure the institution has transmitted accurate and complete student data to the COD system for all Federal Direct Student Loan borrowers in accordance with federal requirements.
During fiscal year 2024, audit procedures revealed that three of 12 (25%) monthly direct loan reconciliations were not completed timely, ranging from 29 to 91 days past the end of the next month. In addition, five of 12 (42%) were not reviewed timely, ranging from 14 to 155 days after the end of the next month.
Criteria:
34 CFR 685.300(b)(5) requires that schools must, on a monthly basis, reconcile institutional records with Federal Direct Student Loan funds received and disbursement records submitted to and accepted by the USDOE.
Per the 2023-2024 Federal Student Financial Aid Handbook (Vol. 4, Ch. 6), a school that participates in the Federal Direct Student Loan Program is required monthly to reconcile cash (funds it received from the G5 system to pay its students) with disbursements (actual disbursement records) it submitted to the COD system.
Cause:
LSUHSC-NO did not have adequate controls in place to ensure timely preparation and review of monthly Direct Loan reconciliations.
Effect:
Failure to perform the monthly reconciliations timely could result in LSUHSC-NO reporting inaccurate information to the COD system and place LSUHSC-NO in noncompliance with Direct Loan federal regulations. In addition, failure to reconcile to the G5 system could affect the overall cash management controls.
Recommendation:
Management should strengthen its controls to ensure LSUHSC-NO timely prepares and reviews monthly reconciliations of the institution’s financial and business records to the G5 and COD systems.
Management’s Response and Corrective Action Plan:
Management concurred in part and provided a corrective action plan (B-41).
2024-015 - Inaccurate Reporting of Student Enrollment Status
State Entity: Louisiana State University Health Sciences Center – New Orleans (LSUHSC-NO)
Award Year: 2024
Award Number: P268K241518
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
LSUHSC-NO did not ensure changes in enrollment status for students who received Federal Direct Student Loans were accurately and timely reported to the National Student Loan Data System (NSLDS), as required by federal regulations.
In a non-statistical sample of 60 students tested for changes in enrollment from a population of 671 students with changes in enrollment status, we noted the following:
• Six (10%) students had inaccurate enrollment statuses reported in the NSLDS, and
• Seven (12%) students’ enrollment status changes were not reported timely, ranging from 29 to 107 days late.
Criteria:
34 CFR 685.309 requires, unless an institution expects to submit its next updated enrollment report to the U.S. Department of Education (USDOE) within the next 60 days, a school must notify the USDOE within 30 days after the school discovers that a loan under Title IV was made to or on behalf of a student who was enrolled or accepted for enrollment at the school, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended.
Cause:
LSUHSC-NO did not have proper controls in place to ensure changes in enrollment status for students who received Federal Direct Student Loans were accurately and timely reported to NSLDS.
Effect:
Inaccurate and untimely reporting of changes in enrollment status could impact the student’s financial aid eligibility and result in either the advance or delay of a student’s grace period or obligation to begin or resume making scheduled loan payments, which could impair the federal government’s ability to recoup loan funds from the student and results in noncompliance with federal regulations.
Recommendation:
Management should strengthen its procedures over changes in enrollment status for students receiving Federal Direct Student Loans and report accurate and timely information to NSLDS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a plan of corrective action (B-43).
2024-016 - Control Weakness over and Noncompliance with Enrollment Reporting
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
Southern University at Baton Rouge (SUBR) did not ensure changes in enrollment status for students who received Federal Pell Grant Program funds and/or Federal Direct Student Loans were accurately and timely reported to the National Student Loan Data System (NSLDS), as required by federal regulations.
In a non-statistical sample of 60 students tested for changes in enrollment status from a population of 1,124 students, the following was identified:
• 17 (28%) students had incorrect enrollment information. Six students had an NSLDS program length that did not agree to the SUBR catalog, and 11 students had incorrect enrollment statuses reported.
• 27 (45%) students did not have their enrollment changes correctly updated within 60 days.
Criteria:
34 CFR 685.309(b)(2), related to Federal Direct Student Loans, requires, unless it expects to submit its next updated enrollment report to the U.S. Department of Education (USDOE) within the next 60 days, a school must notify the USDOE within 30 days after the date the school discovers that a loan under Title IV of the Act was made to or on behalf of a student who was enrolled or accepted for enrollment at the school, and the student has ceased to be enrolled on at least a half-time basis or failed to enroll on at least a half-time basis for the period for which the loan was intended.
34 CFR 690.83(b)(2), related to the Federal Pell Grant Program, requires an institution to submit, in accordance with deadline dates established by the USDOE through publication in the Federal Register, other reports and information the USDOE requires and to comply with the procedures the USDOE finds necessary to ensure that the reports are correct. The section titled Deadline Dates for Enrollment Reporting by Institutions in the Federal Register (88 FR 41092) refers to the NSLDS Enrollment Reporting Guide. The NSLDS Enrollment Reporting Guide, section 1.4, requires the institution to certify enrollment every 60 days.
Cause:
SUBR did not have proper controls in place to ensure changes in enrollment status for students who received Federal Pell Grant Program funds and Federal Direct Student Loan funds were accurately and timely reported to NSLDS. In addition, when SUBR attempted to submit the enrollment report, there was a file structure error preventing the data from being submitted timely.
Effect:
Inaccurate and untimely reporting of changes in enrollment status could impact the student’s Pell Grant or student loan eligibility and result in noncompliance with federal regulations. For students moving into repayment, reporting of changes in enrollment status affects when the grace period begins and how soon a student must begin repaying loan funds.
Recommendation:
Management should strengthen its procedures over changes in enrollment status for students receiving Federal Pell Grant Program funds and Federal Direct Student Loans to ensure SUBR reports accurate and timely information to NSLDS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-54).
2024-017 - Control Weakness over and Noncompliance with Return of Title IV Funds
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Special Tests and Provisions
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
SUBR did not have adequate controls in place to ensure that the return of Title IV funds were properly calculated and returned to the U.S. Department of Education (USDOE) as required by federal regulations. In addition, post-withdrawal disbursement requirements for Title IV funds were not followed.
In a non-statistical sample of 60 students for the Fall 2023 and Spring 2024 semesters, from a population of 456 students who received Title IV funding and ceased attendance or never began attendance, the following was noted:
• For 16 students (27%), SUBR did not perform a return of Title IV funds calculation because the students were incorrectly identified as enrolled rather than unofficially withdrawn, which resulted in $39,183 of Title IV funds not being returned to the USDOE.
• For two students (3%), SUBR used incorrect withdrawal dates in the return of Title IV calculation, which resulted in one of the students requiring a Title IV return of $372.
• For three students (5%), SUBR did not follow the requirements for post-withdrawal disbursements of grant funds by not providing timely notification of the post-withdrawal disbursement to the student or parent.
Criteria:
34 CFR 668.22(a)(1) requires the institution to determine the amount of Title IV funds that the student earned as of the student’s withdrawal date. 34 CFR 668.22(e)(4) requires the institution to calculate the amount of unearned Title IV assistance to be returned. 34 CFR 668.22(j) requires the institution to return unearned Title IV funds within 45 days of the determination date of withdrawal, and to determine the date of withdrawal within 30 days after the end of the period of enrollment.
Per 34 CFR 668.22(a)(6)(iii)(A), for post withdrawal disbursements, a written notification must be provided to the student or parent within 30 days of the date of the institution’s determination that the student withdrew.
34 CFR 668.22(e)(2) the percentage of Title IV funds earned by the student is equal to the percentage of the period of enrollment that the student completed if this date occurs on or before completion of 60 percent of the period of enrollment.
Cause:
SUBR did not follow its procedures to unofficially withdraw students who stopped attending classes prior to completing 60% of the semester. Also, instructors entered conflicting information for students’ final grade and/or students’ last day of attendance. In addition, federal guidelines were not followed when making a post withdrawal disbursement.
Effect:
Failure to return Title IV funds, prepare accurate calculations, and follow requirements related to post withdrawal disbursements resulted in noncompliance with federal regulations and increases the risk that federal funds will be required to be returned to the federal grantor. Audit procedures identified $39,555 that SUBR did not return to the USDOE, which are considered questioned costs.
Recommendation:
Management should strengthen controls to ensure that funds are returned timely to the USDOE, ensure that all return of Title IV funds calculations are performed accurately, and federal guidance for post withdrawal disbursements is followed. In addition, management should ensure instructors submit accurate grade and attendance information in order to determine a student’s correct enrollment status and last day of attendance.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-56).
2024-018 - Inadequate Internal Controls and Noncompliance with Cash Management Requirements
State Entity: Southern University at Baton Rouge (SUBR)
Award Year: 2024
Award Numbers: P063P231525, P268K241525
Compliance Requirement: Cash Management
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
SUBR did not comply with federal regulations regarding the timely return of excess Title IV funds. In our audit procedures for the fiscal year ended June 30, 2024, we noted SUBR overdrew $9.7 million in Federal Direct Student Loan funds on September 18, 2023, as the amount drawn exceeded what was needed for immediate loan disbursements to students. However, total Title IV funds were not overdrawn as there was also an under draw of the Federal Pell Grant Program (Pell). The overdraw on September 18, 2023, did not cause SUBR to have excess cash until Pell funds were drawn on September 29, 2023. Federal regulations consider an institution to have excess cash if those funds are not distributed within three business days of the draw. At the end of the third business day subsequent to the draw on September 29, 2023, SUBR had excess cash of approximately $2 million in Title IV funding. The excess cash was later detected by SUBR and refunded to the U.S. Department of Education (USDOE) on November 4, 2023; therefore, no questioned costs existed at fiscal year-end.
Criteria:
Per 34 CFR 668.162(b), under the advance payment method, an institution submits a request for funds to the USDOE. The institution’s request may not exceed the amount of funds the institution needs immediately for disbursements the institution has made or will make to eligible students and parents.
Per 34 CFR 668.166(a), USDOE considers excess cash to be any amount of Title IV program funds, other than Federal Perkins Loan program funds, that an institution does not disburse to students by the end of the third business day following the date the institution received those funds from the USDOE.
Cause:
Due to a weakness in internal controls over drawdowns of Title IV funds, SUBR drew funds from Federal Direct Student Loans on September 18, 2023, but a portion of these funds should have been drawn from the Federal Pell Grant Program. Although SUBR has a reconciliation process, it is not suitably designed to timely detect overdraws for Title IV programs.
Effect:
Failure to implement sufficient controls over cash management requirements resulted in an overdraw of Title IV funds and noncompliance with cash management regulations.
Recommendation:
Management should strengthen its procedures over the drawing of Title IV funds to ensure timely compliance with federal cash management requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-58).
2024-019 - Noncompliance and Inadequate Controls over Direct Loan Monthly Reconciliations
State Entity: University of Louisiana at Monroe (ULM)
Award Year: 2024
Award Numbers: P268K241521, P268K251521
Compliance Requirement: Cash Management
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The University of Louisiana at Monroe (ULM) did not have adequate controls in place to ensure that monthly reconciliations for the Federal Direct Student Loans program were performed to meet the federal requirements. In addition, ULM did not have documented or verifiable policies and procedures for the reconciliation process. Each month, the U.S. Department of Education’s (USDOE) Common Origination and Disbursement (COD) system provides the institution the School Account Statement (SAS) data file, which must be used to reconcile the institution’s financial records to ensure the institution has transmitted accurate and complete student data to the COD system for all Federal Direct Student Loans borrowers in accordance with federal regulations.
In a non-statistical sample of two monthly Direct Loan reconciliations, we found that for both months selected:
• ULM did not utilize the SAS to reconcile all Direct Loan funds received and disbursed as recorded by USDOE systems to ULM’s internal records.
• Monthly reconciliations did not include sufficient support identifying discrepancies and/or resolution.
• Reconciliations did not identify any remaining cash balances or justification for such.
• ULM could not provide evidence of review for their monthly reconciliations.
Criteria:
34 CFR 685.300(b)(5) requires that schools must, on a monthly basis, reconcile institutional records with Federal Direct Student Loans funds received and disbursement records submitted to and accepted by USDOE.
The 2023 - 2024 Federal Student Financial Aid Handbook (Vol. 4, Ch. 6) notes that a school that participates in the Federal Direct Student Loans Program is required to reconcile cash (funds it received from the G5 system to pay its students) with disbursements (actual disbursement records) it submitted to the COD system monthly. A school is considered to have completed its monthly reconciliation when all differences between the Direct Loan SAS and the school’s internal records have been resolved or documented and the school’s ending cash balance is zero. In addition, schools should clearly outline their reconciliation process and documentation requirements in their policies and procedures.
Cause:
ULM did not have documented or verifiable policies and procedures for the reconciliation process.
Effect:
Failure to properly perform and document the required monthly Direct Loan reconciliations could result in undetected discrepancies between the institution’s financial records and data in the COD system which could result in cash overdraws.
Recommendation:
Management should develop adequate internal controls, including documenting policies and procedures to ensure accurate preparation, documentation, and review of Direct Loan monthly reconciliations as required by the federal grantor.
Management’s Response and Corrective Action Plan:
Management acknowledged the issues noted in the finding and provided a corrective action plan (B-66).
2024-032 - Inadequate Controls over and Noncompliance with Federal Financial Reporting
State Entity: Louisiana Department of Health - Office of Public Health (OPH)
Award Year: 2024
Award Number: NU90TP922016
Compliance Requirement: Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Louisiana Department of Health - Office of Public Health (OPH) did not have adequate controls in place to ensure that federal financial reports were accurate, current, and complete prior to being submitted to the federal agency for the Public Health Emergency Preparedness federal program for the June 30, 2024 reporting period. OPH's annual report for the reporting period June 30, 2024 improperly included expenditures totaling $146,598 from the period July 2024 through September 2024.
Criteria:
2 CFR 200.302(b)(2) states accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in 2 CFR 200.328 and 200.329 is required. In addition, the U.S. Centers for Disease Control and Prevention guidance indicates that the report must include only those funds authorized and expended during the timeframe of the report.
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Cause:
OPH did not have adequate controls in place to ensure the federal financial report only included expenditures for the period being reported prior to submission to the federal agency.
Effect:
Failure to establish adequate controls over financial reporting could result in inaccurate information being reported to the federal agency.
Recommendation:
OPH should design and implement controls to ensure all information contained in the financial reports submitted to federal agencies is accurate, current, and complete for the reporting period covered under the report.
Management’s Response and Corrective Action Plan:
Management did not concur with the finding stating that the amount in question is immaterial and does not misstate the federal financial report. To address the control weakness, management provided a corrective action plan (B-36).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-021 – Unauthorized Employee Fuel Transactions
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2023, 2024
Award Numbers: 2301LAFOST, 2301LASOSR, 2401LAFOST
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The DCFS Bureau of Audit and Compliance Services investigated and identified multiple instances of unauthorized fuel transactions made by a former DCFS employee of approximately $97,500 in fiscal year 2024. Of that total, $5,191 was charged to the Social Services Block Grant federal program and $32,555 was charged to the Foster Care federal program through the cost allocation process.
Criteria:
DCFS policy and procedures require each DCFS office to have a Fleet or Safety Coordinator responsible for overseeing the FuelTrac account. DCFS Policy 1-15 also requires each office to establish internal management procedures and guidelines for handling state vehicles.
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Cause:
The misappropriation occurred because DCFS did not have adequate controls in place to timely detect or prevent the employee from making and concealing unauthorized fuel transactions.
Effect:
As of March 31, 2024, the employee being investigated resigned. Inadequate controls over FuelTrac increases the risk that inappropriate transactions could occur and unallowable costs could be charged to federal programs. The total identified federal questioned cost in fiscal year 2024 due to this misappropriation is $37,746.
Recommendation:
DCFS should establish policies and procedures at an appropriate level to ensure fuel transactions are properly monitored and that duties are properly segregated.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2024-003 - Control Weakness and Noncompliance Related to Cost Allocation Process
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2018, 2023, 2024
Award Numbers: 1804LACEST, 2301LASOSR, 2401LACSES, 2401LAFOST, 2401LASOSR, 2401LATANF, SNAP - Letter of Credit
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: Yes (Prior Year Finding No. 2023-003)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure the correct allocation of expenditures in accordance with the Cost Allocation Plan, which assigns costs to federal programs.
In a non-statistical sample of 60 cost allocation forms out of a population of 921 forms, three (5%) forms used percentages from a prior month and amounts were applied to the incorrect cost allocation grant, which resulted in the incorrect allocation of costs to various cost pools affecting multiple federal programs. These errors resulted in overbilling Temporary Assistance for Needy Families program by $1,907, Child Support Services (CSS) program by $1,161, State Administrative Matching Grants for the Supplemental Nutrition Assistance Program (SNAP) by $389, Foster Care Title IV-E program by $1,216, and Social Services Block Grant program by $12. The amounts overbilled represent questioned costs. In addition, the CSS and SNAP programs were underbilled by $621 and $4,684, respectively.
Criteria:
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Per 2 CFR 200.400(d), the accounting practices of the non-federal entity must be consistent with cost principles and support the accumulation of costs as required and must provide for adequate documentation to support costs charged to the federal award.
Cause:
These errors occurred because there was not an effective review process in place to identify amounts being charged incorrectly through the cost allocation process.
Effect:
Failure to adequately review cost allocation supporting documentation increases the risk that unallowable costs could be charged to federal programs. This is the second consecutive year we have reported to DCFS management exceptions with internal controls related to the cost allocation process.
Recommendation:
Management should strengthen internal controls over the cost allocation review process.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-2).
2024-020 – Control Weakness over Social Services Block Grant Expenditures
State Entity: Department of Children and Family Services (DCFS)
Award Year: 2024
Award Number: 2401LASOSR
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Department of Children and Family Services (DCFS) did not have adequate controls in place to ensure that expenditures charged to the Social Services Block Grant (SSBG) federal program through their Tracking Information Payment System (TIPS) were supported and approved.
In a statistical sample of 40 expenditures out of a population of 64,711 expenditure transactions totaling $17,347,798, we noted the following deviations:
• For one (3%) transaction, DCFS was unable to provide the TIPS payment form, which shows evidence of review and approval for the payment detail. However, DCFS did provide the invoice, which included payment detail information to support allowability of the expenditure.
• For one (3%) transaction, the TIPS payment form lacked evidence of review and approval as it was not signed by a supervisor.
Criteria:
2 CFR 200.303 requires non-federal entities 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:
Management represented that the cause for these deviations is due to a shortage of staffing in positions that prepare and process these TIPS forms.
Effect:
Failure to maintain adequate controls increases the risk that errors and omissions may occur and remain undetected.
Recommendation:
Management should strengthen internal controls to ensure that SSBG expenditures maintained in TIPS are supported and approved.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-3).
2024-021 – Unauthorized Employee Fuel Transactions
State Entity: Department of Children and Family Services (DCFS)
Award Years: 2023, 2024
Award Numbers: 2301LAFOST, 2301LASOSR, 2401LAFOST
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The DCFS Bureau of Audit and Compliance Services investigated and identified multiple instances of unauthorized fuel transactions made by a former DCFS employee of approximately $97,500 in fiscal year 2024. Of that total, $5,191 was charged to the Social Services Block Grant federal program and $32,555 was charged to the Foster Care federal program through the cost allocation process.
Criteria:
DCFS policy and procedures require each DCFS office to have a Fleet or Safety Coordinator responsible for overseeing the FuelTrac account. DCFS Policy 1-15 also requires each office to establish internal management procedures and guidelines for handling state vehicles.
2 CFR 200.303(a) requires that non-federal entities receiving federal awards establish and maintain effective internal control designed to reasonably ensure compliance with federal statutes, regulations, and the terms and conditions of the federal awards.
Cause:
The misappropriation occurred because DCFS did not have adequate controls in place to timely detect or prevent the employee from making and concealing unauthorized fuel transactions.
Effect:
As of March 31, 2024, the employee being investigated resigned. Inadequate controls over FuelTrac increases the risk that inappropriate transactions could occur and unallowable costs could be charged to federal programs. The total identified federal questioned cost in fiscal year 2024 due to this misappropriation is $37,746.
Recommendation:
DCFS should establish policies and procedures at an appropriate level to ensure fuel transactions are properly monitored and that duties are properly segregated.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-4).
2024-023 - Inadequate Controls over Billing for Behavioral Health Services
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-021)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LDH, the managed care organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in the Medical Assistance Program and Children’s Health Insurance Program were properly billed and that improper encounters were denied. For fiscal year 2024, we identified approximately $14.4 million in encounters for services between July 1, 2023, and June 30, 2024, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors. Providers were paid $11,075,376 for 166,209 encounters that were billed using incorrect procedure and modifier codes. Providers were paid $3,306,206 for 32,987 encounters that exceeded LDH’s specialized behavioral health services fee schedules.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Implementation of this protocol began in fiscal year 2023 and has continued through fiscal year 2024. However, auditors noted that for the second year in a row the EQR’s analysis did not review the use of location modifiers in encounters and did not exclude encounters from providers that were approved by MCO’s to bill in excess of the fee schedule.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of these providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also uses this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-14).
2024-024 - Inadequate Controls over Reporting and Matching Federal Compliance Requirements for the Medicaid and Children's Health Insurance Programs
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Matching, Level of Effort, Earmarking; Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-022)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to ensure compliance with reporting and matching requirements for the Medical Assistance Program (Medicaid) and the Children’s Health Insurance Program (CHIP) for all four quarters of fiscal year 2024. The following errors were noted throughout the Centers for Medicare and Medicaid Services (CMS) quarterly federal expenditure reports prepared by LDH:
• For each quarter of fiscal year 2024, quarterly adjustment expenditures were either incorrectly recorded on the CMS quarterly federal expenditure reports and/or within the financial statements.
• For both the March 31, 2024 and June 30, 2024 reports LDH incorrectly completed the Medicaid Drug Rebate Schedule 64.9R. For the March 31, 2024 report, an invoice amount of $0 was reported as the rebates invoiced in this quarter rather than the correct amount of $243,910,667. For the June 30, 2024 report, LDH incorrectly adjusted the schedule 64.9R resulting in numerous errors and a net understatement of $220,130,454 in an effort to correct the error from the March 31, 2024 report.
• LDH incorrectly overstated federal fiscal year 2023 Disproportionate State Hospital (DSH) payments by $820,395 on schedule 64.9D for the September 30, 2023 report.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.328 and §200.329 is required. The Medicaid and CHIP programs require quarterly reporting to CMS detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, a good system of internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not have adequate controls in place to ensure the reconciliation of the expenditures recorded in LDH’s financial statements to the expenditures reported to CMS. In addition, the quarterly adjustments were not properly reviewed to ensure that adjustments affecting the financial statements were properly recorded.
Effect:
As a result, LDH failed to detect multiple errors between the financial statements and CMS quarterly federal expenditure reports, as well as errors on various schedules in the quarterly reports. Uncorrected errors in the reports increase the risk that federal funds will be overdrawn or underdrawn and place LDH in noncompliance with federal regulations.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports and quarterly adjustments to ensure federal expenditures are accurately reported. In addition, LDH management should incorporate a reconciliation of federal expenditures in the financial statements to federal expenditures reported to CMS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-17).
2024-026 - Inadequate Internal Controls over Eligibility Determinations
State Entity: Louisiana Department of Health (LDH)
Award Years: 2022, 2023, 2024
Award Numbers: 2205LA5MAP, 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2023-024)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fifth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medical Assistance Program (Medicaid) and Children’s Health Insurance Program (CHIP) programs for the fiscal year ended June 30, 2024.
From a population of 73,333,570 Medicaid Per-Member-Per-Month (PMPM) and Fee-For-Service (FFS) payments totaling $13.3 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for nineteen (31.67%) out of 60 payments tested.
The following errors were noted for Medicaid:
• For four payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For 11 payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For two payments, LDH did not follow policies to discontinue coverage at the end of the COVID -19 public health emergency for beneficiaries whose citizenship status remained unverified at the end of their reasonable opportunity period. These beneficiaries were therefore not validly enrolled during fiscal year 2024.
• For one payment, LDH failed to continue coverage on a beneficiary who had been determined eligible at renewal, causing a one-month lapse in coverage.
• For one payment, LDH personnel failed to verify Louisiana residency for the initial application on a beneficiary who resided out of state. The beneficiary’s application listed an out of state address in a border city. LDH failed to review the address to verify the exact state of residence, which would have resulted in a denial of coverage. Therefore, the beneficiary was not validly enrolled at initial application in fiscal year 2022.
In addition, from a population of 6,646,797 CHIP PMPM and FFS payments totaling $538 million, a non-statistical sample of 60 CHIP payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for eleven (18.33%) out of 60 payments tested.
The following errors were noted for CHIP:
• For two payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For five payments, issues in the Louisiana Medicaid Eligibility Determination System resulted in inadequate documentation within the case record to support the eligibility redetermination for the beneficiary.
• For three payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For one payment, LDH personnel failed to accurately perform all required eligibility determinations before enrolling the beneficiary, therefore the beneficiary was invalidly enrolled when they initially applied for eligibility in fiscal year 2023.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a beneficiary must meet all eligibility factors and the beneficiary’s case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid Eligibility Manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility determination and redeterminations per the federal regulations and the Medicaid Eligibility Manual.
Effect:
Proper eligibility determination and redetermination are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $28,793 in federal funds were noted in relation to the Medicaid beneficiaries who were invalidly enrolled or whose renewal determination resulted in an erroneous certification of eligibility.
Questioned costs totaling $6,042 in federal funds were noted in relation to the CHIP beneficiary who was invalidly enrolled. We did not note any questioned costs related to the other errors.
Recommendation:
LDH should ensure its employees follow procedures and federal regulations relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding stating they did not concur with one Medicaid and six CHIP errors noted within the finding. For those errors that management concurred with, a corrective action plan was provided (B-24).
Auditor’s Additional Comments:
LDH noted in their response they did not concur with the errors noted for the Medicaid and CHIP renewals related to SNAP or express lane eligibility not being properly documented and indicated that system logs were provided. The LaMEDS log tables were considered by the auditor and no errors in the eligibility determination were reported. The errors noted in the finding relate to a weakness in internal controls as the system bug noted in the case record produced inadequate documentation. In addition, LDH stated in their response they did not concur with one CHIP finding for inadequate documentation regarding income to support the renewal determination. The error noted by the auditor did not relate specifically to the missing affidavit, but that sufficient support was not obtained by LDH to support the change in income from the application.
2024-027 - Noncompliance with and Inadequate Controls over Maternity Kick Payments
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-025)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not adhere to established policies and procedures regarding maternity kick payments for fiscal year 2024. Maternity kick payments are one-time payments made by LDH to reimburse the Healthy Louisiana Managed Care Organizations (MCOs) for the costs associated with pre- and post-partum maternal care, as well as the delivery event itself. These payments are paid to an MCO upon submission of satisfactory evidence of the event or treatment which is referred to as a triggering event.
During the period July 1, 2023, through June 30, 2024, LDH paid out 30,004 Medical Assistance Program (Medicaid) maternity kick payments totaling $307 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all Medicaid maternity kick payments, we identified 21 kick payments totaling $146,584 in federal funds that were paid to the Healthy Louisiana MCOs based on an ineligible triggering event.
During the period July 1, 2023, through June 30, 2024, LDH paid out 4,672 Children’s Health Insurance Program (CHIP) maternity kick payments totaling $47.7 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all CHIP maternity kick payments, we identified three kick payments totaling $26,218 in federal funds that were paid to the Healthy Louisiana MCOs based on an ineligible triggering event.
Criteria:
Louisiana Administrative Code (LAC) Title 50, Part I, Section 3509(A)(5) states MCOs may be reimbursed a one-time supplemental lump sum payment, referred to as a kick payment. The kick payment is intended to cover the cost of a specific care event or treatment. Payment will be made to the MCO upon submission of satisfactory evidence of the event or treatment under Title XIX to the Social Security Act. In accordance with this guidance, LDH policies require an eligible triggering event to occur before a maternity kick payment can be made. LDH procedures also require that a review of kick payments be performed semi-annually.
Cause:
LDH did not adhere to the established policies and procedures regarding maternity kick payments and their reviews in FY 2024 failed to notate the coding error that allowed kick payments to be paid for ineligible triggering events.
Effect:
There is an increased risk that maternity kick payments are being paid to Healthy Louisiana MCOs for triggering events that may not have taken place or do not have satisfactory supporting evidence.
Recommendation:
LDH should strengthen existing policies and procedures to ensure all maternity kick payments are supported with an eligible triggering event before payment is made to the MCOs.
Management’s Response and Corrective Action Plan:
Management did not concur with the finding stating corrective action is not necessary, as recoveries were identified and processed as part of the regularly scheduled review process; however, LDH will modify the timing of its final quarterly reviews to ensure that payment/voids in June do not result in a finding (B-26).
Auditor’s Additional Comments:
As part of LDH’s procedures over maternity kick payments, LDH has an approved set logic in their claims processing system to pay maternity kick payments to MCOs when an eligible triggering event occurs. As LDH noted in their finding response, the errors noted in the finding were due to an error in this logic. While the logic error was discovered in their September 2024 review, adequate internal controls should be in place and operating effectively to ensure the logic is accurate at the time it is applied to transactions. In addition, recovery from the MCO also does not constitute the return of federal funds. While the MCO may have returned the funds to LDH, the funds must then be returned to the federal government on the next quarterly CMS 64 report. LDH did not provide evidence of this return.
2024-029 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-026)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the seventh consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 23,170 providers paid during fiscal year 2024, it was determined that 8,209 (35%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medical Assistance Program (Medicaid) agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal launched in fiscal year 2022 for existing providers as of March of 2022, new providers were not invited to enroll as this required an amendment to the contract with Gainwell and additional costs. Therefore, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2024 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-30).
2024-031 - Weakness in Controls over and Noncompliance with Provider Overpayments
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-027)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments. From a population of 77,634 transactions totaling $147.1 million, a non-statistical sample of 59 provider overpayments was selected and tested to determine if LDH complied with the federal regulations regarding the refunding of the federal share of provider overpayments. For one (1.69%) out of 59 provider overpayments selected for testing, there was no supporting documentation available to identify the date of discovery. Therefore, the auditor was unable to ensure the federal share of the overpayment was returned timely.
In addition, LDH did not provide evidence that an adequate review was performed for three out of the four (75%) quarterly CMS-64 Line 9 reconciliations. These reviews ensure provider overpayments are reported timely and on the correct line of the CMS-64 federal expenditure quarterly report.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
In December of 2023, as part of their corrective action plan from fiscal year 2023, LDH updated their policy to require the submitting department/agency to specifically identify the date of discovery when providing provider overpayment information to LDH. Although implementation of the new policy began in fiscal year 2024, the policy was not in effect for 6 months out of the year.
In addition, LDH did not ensure controls over provider overpayments were in place and properly monitored for every quarter during fiscal year 2024.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should strengthen internal controls to ensure compliance with federal regulations regarding the timely return of the federal share of provider overpayment collections.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-34).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2020, 2021, 2022
Award Numbers: 1R01MH125395, 2046460, R37AI094595
Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions
Pass-Through Entity: Northwestern University
Repeat Finding: Yes (Prior Year Finding No. 2023-007)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed.
From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-60).
2024-034 - Misappropriation of Research and Development Cluster Funds
State Entity: Louisiana Tech University (La Tech)
Award Year: 2024
Award Numbers: GR301449, GR301541
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
In December 2024, Louisiana Tech University (La Tech) discovered that during the period from February 2024 through November 2024, nine electronic fund transfer (EFT) payments to an out-of-state university totaling $206,451 had been fraudulently diverted to unknown person(s). La Tech reported the fraud to appropriate law enforcement and to the federal grantor.
Criteria:
2 CFR 200.303(a) requires non-federal entities to establish and maintain internal control over the federal award that provides reasonable compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.403(a) indicates costs must be necessary and reasonable for the performance of the federal award.
Cause:
The misappropriation of funds occurred after an unknown individual(s) submitted fraudulent emails impersonating La Tech’s point of contact with the out-of-state university, requesting a change in payment method from physical check to EFT. La Tech processed the request under the incorrect assumption that it was legitimate. The stolen funds originated as grant funding (Research and Development Cluster) from the National Institutes of Health (NIH). La Tech became the direct recipient of the NIH grant funding when La Tech hired a faculty member that had been awarded the NIH grants while employed at the out-of-state university. Research related to the grant funding continued at the out-of-state university and La Tech, as the prime recipient, provided reimbursement.
Effect:
As a result of investigation, La Tech identified $206,451 in payments that were fraudulently diverted to unknown person(s).
In response to this cyber fraud, La Tech management has represented that they are evaluating opportunities to further enhance its internal controls and verification procedures to better safeguard against increasingly sophisticated cyber threats targeting payment remittance processes.
Recommendation:
La Tech should continuously evaluate its internal controls to guard against future fraud attempts.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-49).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-033 - Noncompliance with and Inadequate Controls over Subrecipient Monitoring Requirements at Pennington Biomedical Research Center
State Entity: Louisiana State University and Related Campuses
Award Years: 2021, 2022, 2023
Award Numbers: 1P50MD017338-01, 1R01DK132011-01A1, 1U01AG073204-01, 1U01CA271279-01
Compliance Requirement: Subrecipient Monitoring
Pass-Through Entity: University of Alabama at Birmingham
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Pennington Biomedical Research Center (PBRC) did not adequately monitor subrecipients of the Research and Development (R&D) Cluster programs. In a non-statistical sample of nine grants to subrecipients, out of a population of 61 grants, it was noted that for five (56%) of the grants evaluated, PBRC could not provide evidence that the required risk analyses were performed to evaluate the subrecipient’s fraud risk and risk of noncompliance with the subaward agreement.
Criteria:
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient’s fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring.
Cause:
PBRC did not follow established controls to ensure that R&D Cluster award subrecipients were monitored in accordance with federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal grantor.
Recommendation:
PBRC should strengthen controls to ensure risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-38).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-033 - Noncompliance with and Inadequate Controls over Subrecipient Monitoring Requirements at Pennington Biomedical Research Center
State Entity: Louisiana State University and Related Campuses
Award Years: 2021, 2022, 2023
Award Numbers: 1P50MD017338-01, 1R01DK132011-01A1, 1U01AG073204-01, 1U01CA271279-01
Compliance Requirement: Subrecipient Monitoring
Pass-Through Entity: University of Alabama at Birmingham
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Pennington Biomedical Research Center (PBRC) did not adequately monitor subrecipients of the Research and Development (R&D) Cluster programs. In a non-statistical sample of nine grants to subrecipients, out of a population of 61 grants, it was noted that for five (56%) of the grants evaluated, PBRC could not provide evidence that the required risk analyses were performed to evaluate the subrecipient’s fraud risk and risk of noncompliance with the subaward agreement.
Criteria:
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient’s fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring.
Cause:
PBRC did not follow established controls to ensure that R&D Cluster award subrecipients were monitored in accordance with federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal grantor.
Recommendation:
PBRC should strengthen controls to ensure risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-38).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-033 - Noncompliance with and Inadequate Controls over Subrecipient Monitoring Requirements at Pennington Biomedical Research Center
State Entity: Louisiana State University and Related Campuses
Award Years: 2021, 2022, 2023
Award Numbers: 1P50MD017338-01, 1R01DK132011-01A1, 1U01AG073204-01, 1U01CA271279-01
Compliance Requirement: Subrecipient Monitoring
Pass-Through Entity: University of Alabama at Birmingham
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Pennington Biomedical Research Center (PBRC) did not adequately monitor subrecipients of the Research and Development (R&D) Cluster programs. In a non-statistical sample of nine grants to subrecipients, out of a population of 61 grants, it was noted that for five (56%) of the grants evaluated, PBRC could not provide evidence that the required risk analyses were performed to evaluate the subrecipient’s fraud risk and risk of noncompliance with the subaward agreement.
Criteria:
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient’s fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring.
Cause:
PBRC did not follow established controls to ensure that R&D Cluster award subrecipients were monitored in accordance with federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal grantor.
Recommendation:
PBRC should strengthen controls to ensure risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-38).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-034 - Misappropriation of Research and Development Cluster Funds
State Entity: Louisiana Tech University (La Tech)
Award Year: 2024
Award Numbers: GR301449, GR301541
Compliance Requirement: Allowable Costs/Cost Principles
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
In December 2024, Louisiana Tech University (La Tech) discovered that during the period from February 2024 through November 2024, nine electronic fund transfer (EFT) payments to an out-of-state university totaling $206,451 had been fraudulently diverted to unknown person(s). La Tech reported the fraud to appropriate law enforcement and to the federal grantor.
Criteria:
2 CFR 200.303(a) requires non-federal entities to establish and maintain internal control over the federal award that provides reasonable compliance with federal statutes, regulations, and the terms and conditions of the federal award. 2 CFR 200.403(a) indicates costs must be necessary and reasonable for the performance of the federal award.
Cause:
The misappropriation of funds occurred after an unknown individual(s) submitted fraudulent emails impersonating La Tech’s point of contact with the out-of-state university, requesting a change in payment method from physical check to EFT. La Tech processed the request under the incorrect assumption that it was legitimate. The stolen funds originated as grant funding (Research and Development Cluster) from the National Institutes of Health (NIH). La Tech became the direct recipient of the NIH grant funding when La Tech hired a faculty member that had been awarded the NIH grants while employed at the out-of-state university. Research related to the grant funding continued at the out-of-state university and La Tech, as the prime recipient, provided reimbursement.
Effect:
As a result of investigation, La Tech identified $206,451 in payments that were fraudulently diverted to unknown person(s).
In response to this cyber fraud, La Tech management has represented that they are evaluating opportunities to further enhance its internal controls and verification procedures to better safeguard against increasingly sophisticated cyber threats targeting payment remittance processes.
Recommendation:
La Tech should continuously evaluate its internal controls to guard against future fraud attempts.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-49).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-008 - Noncompliance with Subrecipient Monitoring Requirements
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2019 - 2023
Award Numbers: DE-EE0009421, FA9550-21-1-0215, M19AC00015, OIA-1920858, OIA-2019511, OIA-2119688, U19AI142636
Compliance Requirement: Subrecipient Monitoring
Repeat Finding: Yes (Prior Year Finding No. 2023-008)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, UL Lafayette did not adequately monitor subrecipients of the Research and Development (R&D) Cluster Programs. In a non-statistical sample of seven subawards out of a population of 50 subawards, it was noted that for six (85.7%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the financial and performance reports required by the subaward agreement were obtained and reviewed by UL Lafayette. For three (42.9%) of the subrecipients evaluated, UL Lafayette could not provide evidence that the required risk analyses were performed to evaluate each subrecipients’ fraud risk and risk of noncompliance with federal regulations and the terms of the subaward. For two of the subrecipients reviewed (28.6%), UL Lafayette was unable to provide documentation that ensured each subrecipient obtained the required audit and that the audit was reviewed so that timely and appropriate action could be taken for any findings pertaining to the federal awards, as required by federal regulations. Additionally, for one (14.3%) of the subrecipients evaluated, the subaward documents did not contain the federal award date as required by federal regulations.
Criteria:
Per 2 CFR 200.332(b)(1)(iv), all pass-through entities must ensure that every subaward includes the federal award date.
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient's fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring.
2 CFR 200.332(e)(1) requires that pass-through monitoring include reviewing financial and performance reports required by the pass-through entity.
2 CFR 200.332(e)(2) and (3) require pass-through entities to issue a management decision on applicable audit findings, in accordance with 2 CFR 200.521, within six months after acceptance of the subrecipient’s audit report by the Federal Audit Clearinghouse, and ensure that the subrecipient takes timely and appropriate corrective action on all findings.
Per 2 CFR 200.332(g), pass-through entities are responsible for verifying that every subrecipient is audited as required by 2 CFR Part 200, subpart F when it is expected that the subrecipient's federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in CFR 200.501 of $750,000 or more in federal awards during the subrecipient’s fiscal year.
Cause:
UL Lafayette did not have sufficient controls in place to adequately monitor subrecipients as required by federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal awarding agency.
Recommendation:
UL Lafayette should strengthen controls to ensure that all required financial and performance reports are obtained and reviewed and that all required subrecipient audit reports are obtained and reviewed in order to evaluate the impact of any findings noted by the audit and issue management decision letters, if applicable. In addition, UL Lafayette should strengthen controls to ensure that required information is included in the subaward documents and that risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-64).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-006 - Control Weakness and Noncompliance with Personnel Expenses Charged to Federal Awards
State Entity: University of Louisiana at Lafayette (UL Lafayette)
Award Years: 2020, 2021, 2022
Award Numbers: 1R01MH125395, 2046460, R37AI094595
Compliance Requirements: Allowable Costs/Cost Principles; Special Tests and Provisions
Pass-Through Entity: Northwestern University
Repeat Finding: Yes (Prior Year Finding No. 2023-007)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fourth consecutive year, the University of Louisiana at Lafayette (UL Lafayette) did not have adequate controls in place to ensure personnel expenses charged to federal Research and Development (R&D) awards accurately reflected work performed.
From a population of 14,024 payroll and non-payroll expenses charged to R&D grants for the fiscal year ending June 30, 2024, a non-statistical sample of 25 transactions were tested for compliance with allowable costs and cost principles requirements. For three (12%) of the payroll transactions, UL Lafayette was unable to provide documentation to show that personnel-related expenses totaling $18,707 were supported by time and effort certifications to ensure the accuracy of budget estimates charged to federal awards as required by federal regulations.
Additionally, UL Lafayette did not perform time and effort certifications for the period January 1, 2024, through June 30, 2024. Because there is no after-the-fact review to ensure the accuracy of personnel costs and efforts charged to the awards, UL Lafayette could not ensure compliance with the requirements of special tests and provisions related to key personnel effort.
Criteria:
2 CFR 200.430(i) specifies the documentation standards for personnel expenses. In order to be allowable, charges to federal awards for personnel expenses must be based on records that accurately reflect the work performed and must be supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Budget estimates alone do not qualify as support for charges to federal awards, but can be used for interim accounting purposes provided that internal controls include an after-the fact review to confirm the accuracy of final amounts charged to federal awards.
Prior approval requirements related to key personnel effort are contained in 2 CFR 200.308(c) and within grant terms and conditions. A reduction of 25% or greater in time devoted to the project from key personnel requires prior approval, as does disengagement of key personnel from the project for three or more months.
Cause:
UL Lafayette noted in their prior-year corrective action that certifications for employees charging time to federal awards would be required annually. Annual certifications are not sufficient to timely detect changes in key personnel effort and ensure prior approvals are obtained when applicable. Furthermore, UL Lafayette noted that the next effort reporting cycle would cover July 1, 2023, through December 31, 2023. The time certification period only covered half of the audit period. As a result, time and effort certifications were not completed by employees on the latter half of the audit period to support that the charges to federal awards for salaries and wages were based on records that accurately reflect the work performed during this period.
Effect:
Inadequate controls related to federal documentation standards for personnel expenses could result in noncompliance with federal allowable costs and cost principles, as well as noncompliance with special tests and provisions related to key personnel effort.
Recommendation:
Management should strengthen internal controls to ensure that personnel expenses charged to the federal awards are supported by a system of internal control, which provides reasonable assurance that the charges are accurate, allowable, and properly allocated. Additionally, Management should revise the Time & Effort Certification policy and/or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements. Management should monitor changes in effort for key personnel and ensure that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-60).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-033 - Noncompliance with and Inadequate Controls over Subrecipient Monitoring Requirements at Pennington Biomedical Research Center
State Entity: Louisiana State University and Related Campuses
Award Years: 2021, 2022, 2023
Award Numbers: 1P50MD017338-01, 1R01DK132011-01A1, 1U01AG073204-01, 1U01CA271279-01
Compliance Requirement: Subrecipient Monitoring
Pass-Through Entity: University of Alabama at Birmingham
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Pennington Biomedical Research Center (PBRC) did not adequately monitor subrecipients of the Research and Development (R&D) Cluster programs. In a non-statistical sample of nine grants to subrecipients, out of a population of 61 grants, it was noted that for five (56%) of the grants evaluated, PBRC could not provide evidence that the required risk analyses were performed to evaluate the subrecipient’s fraud risk and risk of noncompliance with the subaward agreement.
Criteria:
2 CFR 200.332(c) requires pass through entities to evaluate each subrecipient’s fraud risk and risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining the appropriate subrecipient monitoring.
Cause:
PBRC did not follow established controls to ensure that R&D Cluster award subrecipients were monitored in accordance with federal regulations.
Effect:
Failure to properly monitor subrecipients results in noncompliance with federal regulations and increases the likelihood of improper payments which may have to be returned to the federal grantor.
Recommendation:
PBRC should strengthen controls to ensure risk assessments are performed and documented on all subrecipients in accordance with federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-38).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-004 – Noncompliance and Weakness in Controls with Special Tests and Provisions Requirements
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirement: Special Tests and Provisions
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-029)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, Louisiana State University Health Sciences Center in Shreveport (LSUHSC-S) did not have adequate controls in place to ensure compliance with Special Tests and Provisions requirements. We reviewed a non-statistical sample of 12 federal Research and Development Cluster awards from a population of 61 awards, plus two additional awards based on materiality, for the fiscal year ending June 30, 2024. We reviewed the biannual Time and Effort Certification forms, as applicable, for each award and the 27 key personnel assigned to the selected awards.
We noted two of 27 (7.4%) key personnel had documentation indicating that the key personnel were removed from the grant and/or had documentation of actual effort on the Time and Effort Certification forms that did not agree to the effort reported to the federal grantor. There was also no evidence of prior approval from the federal grantor for a change in key personnel.
Criteria:
2 CFR 200.308(f) states that a recipient or subrecipient must request prior written approval from the federal agency or pass-through entity for the following program and budget-related reasons:
• Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
• Change in key personnel (including employees and contractors) that are identified by name or position in the federal award.
• The disengagement from a project for more than three months, or a 25% reduction in time and effort devoted to the federal award over the course of the period of performance, by the approved project director or principal investigator.
Cause:
LSUHSC-S’s controls are not effectively designed to ensure prior approval is obtained for changes in effort by key personnel as required by federal regulations, specifically relating to disengagement from a project for more than three months or a 25% reduction in effort. This is partially due to LSUHSC-S revising its Time & Effort Certification policy in September 2022, which changed the frequency of the certification from quarterly to semiannually.
Effect:
Failure to implement controls over key personnel requirements could result in noncompliance with Special Tests and Provisions requirements.
Recommendation:
Management should monitor changes in effort for key personnel and verify that prior written approval is obtained from the federal grantor for changes that exceed the thresholds set in federal regulations. Management should revise the Time & Effort Certification policy or implement alternative controls designed to ensure compliance with Special Tests and Provisions requirements.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-45).
2024-005 - Noncompliance with and Weakness in Controls over Federal Research and Development Expenses
State Entity: Louisiana State University Health Sciences Center - Shreveport (LSUHSC-S)
Award Years: Various
Award Numbers: Various
Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Cash Management
Pass-Through Entities: Various
Repeat Finding: Yes (Prior Year Finding No. 2023-006)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LSUHSC-S did not ensure internal controls over documentation of personnel services were operating effectively, and did not ensure compliance with federal guidance regarding cost transfers applicable to the Research and Development (R&D) Cluster.
In a non-statistical random sample of 27 out of 2,933 payroll adjusting entries affecting R&D, we noted the following exceptions for 15 adjusting entries, some of which had multiple exceptions:
• Seven (26%) adjustments did not have adequate documentation to fully explain how the error occurred and/or the transfer was not accomplished within 90 days of when the error was discovered.
• For five (19%) adjustments, LSUHSC-S did not provide sufficient information to determine if the cost transfers were completed timely.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient information to verify the new charge was certified by a responsible organizational official.
• For three (11%) adjustments, LSUHSC-S did not provide sufficient documentation to determine whether adjustments were allowable per the award, which resulted in questioned costs totaling $2,686.
• For twelve (44%) adjustments, LSUHSC-S did not provide sufficient documentation to evidence that expenses were incurred prior to reimbursement and that funds were returned to the federal agency for expenses that were removed from the federal award.
We also performed an analysis of interim payroll adjusting journal entries to record cost transfers to and/or from R&D awards. We noted that 465 (20%) out of 2,309 adjusting journal entries were made more than 90 days after the end of the biannual period from the original transactions. The adjustments were made 103 to 430 days after the end of the biannual period.
In addition, in a non-statistical random sample of 53 out of 11,272 expense transactions charged to R&D during the fiscal year ending June 30, 2024, we noted the following exceptions for 10 transactions, some of which had multiple exceptions:
• Six (11%) time and effort certifications for salary and related benefit expenses tested were completed 92 to 248 days after the end of the biannual period, or LSUHSC-S did not provide sufficient documentation to determine that the certifications were completed timely.
• For one (2%) transaction, LSUHSC-S did not provide documentation approving the employee’s salary on the applicable award.
• For four (8%) transactions, LSUHSC-S did not provide documentation that indicated expenses were reconciled and approved prior to submitting reimbursement requests. Additionally, for three of these transactions, LSUHSC-S did not provide sufficient support to determine if the expenses were incurred prior to the reimbursement request or if LSUHSC-S minimized the time that elapsed between the transfer of funds from the federal government and LSUHSC-S’s disbursement for federal program purposes
Finally, it was noted during our procedures related to requisition transactions that LSUHSC-S lacked proper segregation of duties in the online requisition process. We noted in an analysis of all requisition transactions that are subject to online approvals (14,941 transactions totaling $25,349,749) that 4,916 transactions totaling $7,222,206 (28%) did not have adequate segregation of duties. Of these, 306 transactions totaling $338,679 related to the R&D Cluster.
Criteria:
2 CFR 200.430(i)(1)(i) requires that charges to federal awards for salaries and wages must be supported by a system of internal control which provides reasonable assurance the charges are accurate, allowable, and properly allocated. Per 2 CFR 200.430(i)(1)(viii), budget estimates alone do not qualify as support for charges to federal awards, but may be used for interim accounting purposes, provided that the system for establishing the estimates produces reasonable approximations of the activity performed, significant changes in work activity are identified and entered into the records in a timely manner, and the non-federal entity’s system of internal controls includes processes to review after-the-fact interim charges and make necessary adjustments.
Per LSUHSC-S’s Time and Effort Certification Policy and Procedures, LSUHSC-S utilizes time and effort certifications to support salary charges to sponsored projects as an after-the-fact certification of effort of all individuals when all or a portion of their salaries are charged to a sponsored project. Based on LSUHSC-S’s policy, time and effort certifications should be completed within approximately 90 days of the end of the biannual period. Management interprets the end of the period to be when the time and effort reports are sent to the departments once the last month of the biannual period is closed in the accounting system. If there is a substantial (five percent or more) difference between the salary charges and the effort actually expended by the individual on projects during the biannual reporting period, a payroll reallocation must be created within 30 days.
Per 2 CFR 200.303, the non-federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Per the Standards for Internal Control in the Federal Government, examples of common categories of control activities include accurate and timely recording of transactions.
In addition, the National Institutes of Health (NIH) is the grantor for the majority of the LSUHSC-S’s R&D grant awards. Per the NIH Grants Policy Statement §7.5, cost transfers that represent corrections of clerical or bookkeeping errors should be accomplished within 90 days of when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurred and a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was made “to correct error" or "to transfer to correct project" is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.
Cause:
LSUHSC-S faculty are not completing time and effort certifications timely, which contributes to untimely adjustments for compensation.
In addition, LSUHSC-S did not provide sufficient supporting documentation for the auditor to test federal regulations related to cash management for all sample items selected due to an insufficient method for sorting and storing the documentation related to each federal award.
Finally, the lack of segregation of duties was caused by LSUHSC-S granting certain employees’ access that allowed for self-approvals.
Effect:
Untimely certifications and the untimely discovery and correction of errors increases the risk of inaccurate reporting and may result in an inability to complete approved projects within the approved budget and/or period of performance. As a result, LSUHSC-S may have to utilize university funds to complete approved projects.
In addition, inadequate controls and noncompliance with federal awards increases the likelihood of disallowed costs, which LSUHSC-S may have to repay to the federal grantor.
Recommendation:
Management should ensure they have adequate controls over time and effort certifications, purchases, and reimbursement requests. In addition, management should ensure adequate segregation of duties covering approvals of all transaction types.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and outlined a plan of corrective action (B-47).
2024-023 - Inadequate Controls over Billing for Behavioral Health Services
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-021)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LDH, the managed care organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in the Medical Assistance Program and Children’s Health Insurance Program were properly billed and that improper encounters were denied. For fiscal year 2024, we identified approximately $14.4 million in encounters for services between July 1, 2023, and June 30, 2024, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors. Providers were paid $11,075,376 for 166,209 encounters that were billed using incorrect procedure and modifier codes. Providers were paid $3,306,206 for 32,987 encounters that exceeded LDH’s specialized behavioral health services fee schedules.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Implementation of this protocol began in fiscal year 2023 and has continued through fiscal year 2024. However, auditors noted that for the second year in a row the EQR’s analysis did not review the use of location modifiers in encounters and did not exclude encounters from providers that were approved by MCO’s to bill in excess of the fee schedule.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of these providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also uses this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-14).
2024-024 - Inadequate Controls over Reporting and Matching Federal Compliance Requirements for the Medicaid and Children's Health Insurance Programs
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Matching, Level of Effort, Earmarking; Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-022)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to ensure compliance with reporting and matching requirements for the Medical Assistance Program (Medicaid) and the Children’s Health Insurance Program (CHIP) for all four quarters of fiscal year 2024. The following errors were noted throughout the Centers for Medicare and Medicaid Services (CMS) quarterly federal expenditure reports prepared by LDH:
• For each quarter of fiscal year 2024, quarterly adjustment expenditures were either incorrectly recorded on the CMS quarterly federal expenditure reports and/or within the financial statements.
• For both the March 31, 2024 and June 30, 2024 reports LDH incorrectly completed the Medicaid Drug Rebate Schedule 64.9R. For the March 31, 2024 report, an invoice amount of $0 was reported as the rebates invoiced in this quarter rather than the correct amount of $243,910,667. For the June 30, 2024 report, LDH incorrectly adjusted the schedule 64.9R resulting in numerous errors and a net understatement of $220,130,454 in an effort to correct the error from the March 31, 2024 report.
• LDH incorrectly overstated federal fiscal year 2023 Disproportionate State Hospital (DSH) payments by $820,395 on schedule 64.9D for the September 30, 2023 report.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.328 and §200.329 is required. The Medicaid and CHIP programs require quarterly reporting to CMS detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, a good system of internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not have adequate controls in place to ensure the reconciliation of the expenditures recorded in LDH’s financial statements to the expenditures reported to CMS. In addition, the quarterly adjustments were not properly reviewed to ensure that adjustments affecting the financial statements were properly recorded.
Effect:
As a result, LDH failed to detect multiple errors between the financial statements and CMS quarterly federal expenditure reports, as well as errors on various schedules in the quarterly reports. Uncorrected errors in the reports increase the risk that federal funds will be overdrawn or underdrawn and place LDH in noncompliance with federal regulations.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports and quarterly adjustments to ensure federal expenditures are accurately reported. In addition, LDH management should incorporate a reconciliation of federal expenditures in the financial statements to federal expenditures reported to CMS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-17).
2024-025 - Inadequate Controls over Waiver and Support Coordination Service Providers
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5MAP, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-023)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH paid Medicaid Home and Community Based Services (HCBS) claims for the New Opportunities Waiver (NOW) for waiver services that were not adequately documented. In addition, payments were made for the Residential Options Waiver (ROW) for waiver services that were not adequately documented. LDH also paid claims for support coordination services that were not documented in accordance with established policies.
Our testing of NOW and ROW waiver services included 729 claims paid in state fiscal year 2024 totaling $130,881 paid to two providers for 14 beneficiaries. Our test identified errors for 501 claims totaling $16,634 in federal funds, with some claims having multiple errors. The following errors were noted.
• For 383 claims for 13 beneficiaries, the waiver services provider did not provide adequate documentation to support billed services.
• For 121 claims for 9 beneficiaries, the waiver services provider did not provide documentation substantiating the reasons for departures from the approved plan of care (POC).
• For 50 claims for 3 beneficiaries, the waiver services provider billed the units of service for the claim at a rate that was inconsistent with the allocated billing rate per unit in the POC.
• For 4 claims for 1 beneficiary, the waiver services provider inappropriately billed for services that overlapped with non-waiver institutional services.
In addition to testing NOW and ROW waiver services, we also tested claims paid for support coordination services for the 14 waiver beneficiaries tested. In our test of 156 claims paid in fiscal year 2024 totaling $30,544 paid to six support coordination providers for the 14 beneficiaries, the support coordination service provider did not provide adequate documentation to support billed services for six claims for two beneficiaries. The federally funded portion of these claims totaled $768.
Criteria:
42 CFR Part 441, Subpart G requires states to operate their HCBS programs with certain assurances, including health and welfare, financial accountability, and evaluation of need. To meet these assurances, states must demonstrate that they have systems to effectively monitor the adequacy of service plans, the qualifications of providers, and the health and welfare of beneficiaries.
Waiver services are accessed through support coordinators who assist with development and monitoring of the beneficiary’s POC.
Auditors used LDH’s provider manuals to identify required documentation, which includes billing codes, an approved POC, time sheets or electronic clock in/out and progress notes. Provider manuals are intended to give a provider the information needed to fulfill its vendor agreement with the State of Louisiana, and is the basis for federal and state reviews of the program.
The beneficiary’s case record is required to include a copy of the approved POC, including any revisions. The POC documents the beneficiary’s assessed needs and types and quantity of services to address those needs and costs related to services. Direct service providers provide care to a beneficiary based on the approved POC.
According to the LDH service coordination provider manual, service logs are the means for clearly documenting services billed and must be reviewed by supervisors.
In addition, in accordance with 42 CFR 441.301(b)(1)(ii), waiver services are not furnished to individuals who are inpatients of a hospital, nursing facility or inpatient care facility for individuals with an intellectual disability.
Cause:
The errors noted in testing occurred because LDH failed to adequately monitor that NOW and ROW waiver and support coordination providers properly maintained adequate records, supporting documentation, and appropriately billed for services.
Effect:
Without adequate documentation a provider cannot substantiate and auditors cannot verify that the departures were beneficiary-driven and person-centered as required.
Without adequate supporting documentation there is reduced assurance that billed services were properly billed, were actually performed, beneficiaries are receiving needed services, and limited resources are allocated appropriately.
Questioned costs totaling $17,402 in federal funds were noted in relation to the waiver services provider and support coordination services provider not providing adequate documentation to support billed services.
Recommendation:
LDH should ensure all departmental policies and federal regulations for waiver and support coordination services are enforced, including documentation to support claims and evidence that departures from the approved POC meet the needs of the beneficiary. LDH should consider additional provider training regarding documentation requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding stating they did not concur with three of the errors noted in the determination of inadequate controls. For the error that management concurred with, a corrective action plan was provided (B-19).
Auditor’s Additional Comments:
LDH noted in their response they did not concur with three of the errors noted in the determination of inadequate controls over waiver and support coordination providers and have concerns with LLA’s overreliance on documentation in determining control adequacy. According to CFR 200.303(a) the recipient must establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. As part of obtaining reasonable assurance that the system of internal control is operating effectively and implemented, documentation supporting these controls is necessary for the auditor to make these determinations. All control mechanisms that were in place, documented, and provided to the auditor were considered.
In addition, LDH noted that there was no error in the departures from the approved POC nor were there errors associated with the claims that were reported as having been billed at the incorrect rate. As stated in the finding, documentation could not be provided to substantiate the reason for the departure from the approved POC for either the number of units or the allocated billing rate per unit.
Finally, LDH noted that while claims were paid for waiver services that overlapped with non-waiver institutional services, there was no error as LDH’s established controls identified and addressed the overlap in billing. The exceptions noted for these claims were a result of LDH not providing sufficient supporting documentation to the auditor showing the recoupment of the payments for the overlapping shifts.
2024-026 - Inadequate Internal Controls over Eligibility Determinations
State Entity: Louisiana Department of Health (LDH)
Award Years: 2022, 2023, 2024
Award Numbers: 2205LA5MAP, 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2023-024)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fifth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medical Assistance Program (Medicaid) and Children’s Health Insurance Program (CHIP) programs for the fiscal year ended June 30, 2024.
From a population of 73,333,570 Medicaid Per-Member-Per-Month (PMPM) and Fee-For-Service (FFS) payments totaling $13.3 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for nineteen (31.67%) out of 60 payments tested.
The following errors were noted for Medicaid:
• For four payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For 11 payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For two payments, LDH did not follow policies to discontinue coverage at the end of the COVID -19 public health emergency for beneficiaries whose citizenship status remained unverified at the end of their reasonable opportunity period. These beneficiaries were therefore not validly enrolled during fiscal year 2024.
• For one payment, LDH failed to continue coverage on a beneficiary who had been determined eligible at renewal, causing a one-month lapse in coverage.
• For one payment, LDH personnel failed to verify Louisiana residency for the initial application on a beneficiary who resided out of state. The beneficiary’s application listed an out of state address in a border city. LDH failed to review the address to verify the exact state of residence, which would have resulted in a denial of coverage. Therefore, the beneficiary was not validly enrolled at initial application in fiscal year 2022.
In addition, from a population of 6,646,797 CHIP PMPM and FFS payments totaling $538 million, a non-statistical sample of 60 CHIP payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for eleven (18.33%) out of 60 payments tested.
The following errors were noted for CHIP:
• For two payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For five payments, issues in the Louisiana Medicaid Eligibility Determination System resulted in inadequate documentation within the case record to support the eligibility redetermination for the beneficiary.
• For three payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For one payment, LDH personnel failed to accurately perform all required eligibility determinations before enrolling the beneficiary, therefore the beneficiary was invalidly enrolled when they initially applied for eligibility in fiscal year 2023.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a beneficiary must meet all eligibility factors and the beneficiary’s case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid Eligibility Manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility determination and redeterminations per the federal regulations and the Medicaid Eligibility Manual.
Effect:
Proper eligibility determination and redetermination are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $28,793 in federal funds were noted in relation to the Medicaid beneficiaries who were invalidly enrolled or whose renewal determination resulted in an erroneous certification of eligibility.
Questioned costs totaling $6,042 in federal funds were noted in relation to the CHIP beneficiary who was invalidly enrolled. We did not note any questioned costs related to the other errors.
Recommendation:
LDH should ensure its employees follow procedures and federal regulations relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding stating they did not concur with one Medicaid and six CHIP errors noted within the finding. For those errors that management concurred with, a corrective action plan was provided (B-24).
Auditor’s Additional Comments:
LDH noted in their response they did not concur with the errors noted for the Medicaid and CHIP renewals related to SNAP or express lane eligibility not being properly documented and indicated that system logs were provided. The LaMEDS log tables were considered by the auditor and no errors in the eligibility determination were reported. The errors noted in the finding relate to a weakness in internal controls as the system bug noted in the case record produced inadequate documentation. In addition, LDH stated in their response they did not concur with one CHIP finding for inadequate documentation regarding income to support the renewal determination. The error noted by the auditor did not relate specifically to the missing affidavit, but that sufficient support was not obtained by LDH to support the change in income from the application.
2024-029 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-026)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the seventh consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 23,170 providers paid during fiscal year 2024, it was determined that 8,209 (35%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medical Assistance Program (Medicaid) agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal launched in fiscal year 2022 for existing providers as of March of 2022, new providers were not invited to enroll as this required an amendment to the contract with Gainwell and additional costs. Therefore, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2024 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-30).
2024-031 - Weakness in Controls over and Noncompliance with Provider Overpayments
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-027)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments. From a population of 77,634 transactions totaling $147.1 million, a non-statistical sample of 59 provider overpayments was selected and tested to determine if LDH complied with the federal regulations regarding the refunding of the federal share of provider overpayments. For one (1.69%) out of 59 provider overpayments selected for testing, there was no supporting documentation available to identify the date of discovery. Therefore, the auditor was unable to ensure the federal share of the overpayment was returned timely.
In addition, LDH did not provide evidence that an adequate review was performed for three out of the four (75%) quarterly CMS-64 Line 9 reconciliations. These reviews ensure provider overpayments are reported timely and on the correct line of the CMS-64 federal expenditure quarterly report.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
In December of 2023, as part of their corrective action plan from fiscal year 2023, LDH updated their policy to require the submitting department/agency to specifically identify the date of discovery when providing provider overpayment information to LDH. Although implementation of the new policy began in fiscal year 2024, the policy was not in effect for 6 months out of the year.
In addition, LDH did not ensure controls over provider overpayments were in place and properly monitored for every quarter during fiscal year 2024.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should strengthen internal controls to ensure compliance with federal regulations regarding the timely return of the federal share of provider overpayment collections.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-34).
2024-022 - Inadequate Controls over and Noncompliance with Matching and Reporting Requirements Related to the Cost Share Process
State Entity: Louisiana Department of Health (LDH)
Award Year: 2024
Award Number: 2405LA5MAP
Compliance Requirements: Matching, Level of Effort, Earmarking; Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Louisiana Department of Health (LDH) did not have adequate controls in place to ensure the Federal Medical Assistance Percentage (FMAP) was appropriately updated in the cost share tables within LaGov for two out of four quarters (50%) in fiscal year ending June 30, 2024 for the Medical Assistance Program (Medicaid). The FMAP rate in the cost share tables was 1.5% higher than the rates established in the Federal Register for the quarters ending March 31, 2024 and June 30, 2024.
Criteria:
The state is required to pay part of the costs of providing Medicaid services and part of the costs of administering the program. The percentage of federal funding is determined based on the amount of the expenditures and application of the FMAP that is determined for each state using a formula outlined in section 1905(b) of the Act (42 USC 1396d). 2 CFR 200.306(b) states that the basic criteria for acceptable matching include that the funds are verifiable from the non-federal entity’s records, are not included as contributions for any other federal award, and are not paid by the federal government under another federal award.
The CMS-64 quarterly federal expenditure report requires the state to certify that the required amount of state and/or local funds were available and used to match the state’s allowable expenditures included in the report, and such state and/or local funds were in accordance with all applicable federal requirements for the non-federal share match of expenditures. The CMS-64 report also requires the state to certify that the expenditures included in the report are based on the state's accounting of actual recorded expenditures.
Cause:
The cost share tables that automatically calculate the federal and state share of expenditures were not properly updated for the period January 1, 2024 through June 30, 2024.
Effect:
Using the incorrect FMAP to allocate the state share of expenditures caused more expenditures to be allocated to federal funds. This error resulted in federal questioned costs of $87,591,863. Due to this, LDH was unable to provide evidence that the state match requirement was met for the federal expenditures reported on the March 31, 2024 and June 30, 2024 CMS-64 federal expenditure reports.
Recommendation:
LDH management should ensure the cost share tables are appropriately updated for all periods during the fiscal year. In addition, LDH should strengthen controls over preparation and review of the quarterly CMS-64 federal expenditure reports to ensure that the appropriate federal match is applied to qualifying expenditures and the required amount of state and/or local funds are available and used to match the state’s allowable expenditures.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-10).
2024-023 - Inadequate Controls over Billing for Behavioral Health Services
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-021)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the sixth consecutive year, LDH, the managed care organizations (MCOs), and Magellan Health Services (Magellan) did not have adequate controls in place to ensure that behavioral health services in the Medical Assistance Program and Children’s Health Insurance Program were properly billed and that improper encounters were denied. For fiscal year 2024, we identified approximately $14.4 million in encounters for services between July 1, 2023, and June 30, 2024, that were paid by the MCOs and Magellan even though the encounters do not appear to comply with LDH’s encounter coding requirements and/or approved fee schedules.
Our analysis identified the following instances of billing errors. Providers were paid $11,075,376 for 166,209 encounters that were billed using incorrect procedure and modifier codes. Providers were paid $3,306,206 for 32,987 encounters that exceeded LDH’s specialized behavioral health services fee schedules.
Criteria:
LDH’s fee schedule outlines procedure codes for services and the applicable billing rates. Some services require that procedure codes also contain modifier codes which indicate information such as the age of the recipient, location where the service was provided, the educational background of the person providing the service, and the license(s) they have obtained.
The approved fee schedules outline different rates depending on the procedure code and modifier codes. The MCOs can optionally pay more than the minimum LDH fee schedule.
Cause:
In following its corrective action plan from fiscal year 2022, LDH contracted with the External Quality Reviewer (EQR) to validate a representative sample of encounters against the Medicaid fee schedule on file at the time of service delivery, inclusive of modifier utilization. Implementation of this protocol began in fiscal year 2023 and has continued through fiscal year 2024. However, auditors noted that for the second year in a row the EQR’s analysis did not review the use of location modifiers in encounters and did not exclude encounters from providers that were approved by MCO’s to bill in excess of the fee schedule.
The billing errors could be avoided by LDH, the MCOs, and Magellan applying system edits that would flag encounters for further review when encounter coding and/or fee schedule requirements are not followed.
Effect:
Without the required modifiers, the encounter does not contain enough information to determine that the billing was appropriate. Because LDH does not currently maintain a list of these providers in which the MCO pays more than the minimum fee schedule, LDH cannot determine if an encounter paid at an excessive rate was improperly billed.
It is important that encounter data is accurate because LDH and other stakeholders, such as the Medicaid Fraud Control Unit within the Attorney General’s Office, use this data to identify improper payments and potential fraud. LDH also uses this encounter data to establish per member per month rates for the MCOs.
Recommendation:
LDH management should ensure that agency personnel are adequately monitoring the EQR contract and that the proper validations are being conducted to ensure encounters are coded correctly.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-14).
2024-024 - Inadequate Controls over Reporting and Matching Federal Compliance Requirements for the Medicaid and Children's Health Insurance Programs
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Matching, Level of Effort, Earmarking; Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-022)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to ensure compliance with reporting and matching requirements for the Medical Assistance Program (Medicaid) and the Children’s Health Insurance Program (CHIP) for all four quarters of fiscal year 2024. The following errors were noted throughout the Centers for Medicare and Medicaid Services (CMS) quarterly federal expenditure reports prepared by LDH:
• For each quarter of fiscal year 2024, quarterly adjustment expenditures were either incorrectly recorded on the CMS quarterly federal expenditure reports and/or within the financial statements.
• For both the March 31, 2024 and June 30, 2024 reports LDH incorrectly completed the Medicaid Drug Rebate Schedule 64.9R. For the March 31, 2024 report, an invoice amount of $0 was reported as the rebates invoiced in this quarter rather than the correct amount of $243,910,667. For the June 30, 2024 report, LDH incorrectly adjusted the schedule 64.9R resulting in numerous errors and a net understatement of $220,130,454 in an effort to correct the error from the March 31, 2024 report.
• LDH incorrectly overstated federal fiscal year 2023 Disproportionate State Hospital (DSH) payments by $820,395 on schedule 64.9D for the September 30, 2023 report.
Criteria:
According to 2 CFR 200.302(b)(2), accurate, current, and complete disclosure of the financial results of each federal award or program in accordance with the reporting requirements set forth in §200.328 and §200.329 is required. The Medicaid and CHIP programs require quarterly reporting to CMS detailing expenditures by category of service for which states are entitled to federal reimbursement. The federal expenditures reported in the quarterly reports are used to reconcile the draws of federal funds.
In addition, a good system of internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
LDH did not have adequate controls in place to ensure the reconciliation of the expenditures recorded in LDH’s financial statements to the expenditures reported to CMS. In addition, the quarterly adjustments were not properly reviewed to ensure that adjustments affecting the financial statements were properly recorded.
Effect:
As a result, LDH failed to detect multiple errors between the financial statements and CMS quarterly federal expenditure reports, as well as errors on various schedules in the quarterly reports. Uncorrected errors in the reports increase the risk that federal funds will be overdrawn or underdrawn and place LDH in noncompliance with federal regulations.
Recommendation:
LDH management should strengthen controls over preparation and review of the quarterly federal expenditure reports and quarterly adjustments to ensure federal expenditures are accurately reported. In addition, LDH management should incorporate a reconciliation of federal expenditures in the financial statements to federal expenditures reported to CMS.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-17).
2024-025 - Inadequate Controls over Waiver and Support Coordination Service Providers
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5MAP, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-023)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH paid Medicaid Home and Community Based Services (HCBS) claims for the New Opportunities Waiver (NOW) for waiver services that were not adequately documented. In addition, payments were made for the Residential Options Waiver (ROW) for waiver services that were not adequately documented. LDH also paid claims for support coordination services that were not documented in accordance with established policies.
Our testing of NOW and ROW waiver services included 729 claims paid in state fiscal year 2024 totaling $130,881 paid to two providers for 14 beneficiaries. Our test identified errors for 501 claims totaling $16,634 in federal funds, with some claims having multiple errors. The following errors were noted.
• For 383 claims for 13 beneficiaries, the waiver services provider did not provide adequate documentation to support billed services.
• For 121 claims for 9 beneficiaries, the waiver services provider did not provide documentation substantiating the reasons for departures from the approved plan of care (POC).
• For 50 claims for 3 beneficiaries, the waiver services provider billed the units of service for the claim at a rate that was inconsistent with the allocated billing rate per unit in the POC.
• For 4 claims for 1 beneficiary, the waiver services provider inappropriately billed for services that overlapped with non-waiver institutional services.
In addition to testing NOW and ROW waiver services, we also tested claims paid for support coordination services for the 14 waiver beneficiaries tested. In our test of 156 claims paid in fiscal year 2024 totaling $30,544 paid to six support coordination providers for the 14 beneficiaries, the support coordination service provider did not provide adequate documentation to support billed services for six claims for two beneficiaries. The federally funded portion of these claims totaled $768.
Criteria:
42 CFR Part 441, Subpart G requires states to operate their HCBS programs with certain assurances, including health and welfare, financial accountability, and evaluation of need. To meet these assurances, states must demonstrate that they have systems to effectively monitor the adequacy of service plans, the qualifications of providers, and the health and welfare of beneficiaries.
Waiver services are accessed through support coordinators who assist with development and monitoring of the beneficiary’s POC.
Auditors used LDH’s provider manuals to identify required documentation, which includes billing codes, an approved POC, time sheets or electronic clock in/out and progress notes. Provider manuals are intended to give a provider the information needed to fulfill its vendor agreement with the State of Louisiana, and is the basis for federal and state reviews of the program.
The beneficiary’s case record is required to include a copy of the approved POC, including any revisions. The POC documents the beneficiary’s assessed needs and types and quantity of services to address those needs and costs related to services. Direct service providers provide care to a beneficiary based on the approved POC.
According to the LDH service coordination provider manual, service logs are the means for clearly documenting services billed and must be reviewed by supervisors.
In addition, in accordance with 42 CFR 441.301(b)(1)(ii), waiver services are not furnished to individuals who are inpatients of a hospital, nursing facility or inpatient care facility for individuals with an intellectual disability.
Cause:
The errors noted in testing occurred because LDH failed to adequately monitor that NOW and ROW waiver and support coordination providers properly maintained adequate records, supporting documentation, and appropriately billed for services.
Effect:
Without adequate documentation a provider cannot substantiate and auditors cannot verify that the departures were beneficiary-driven and person-centered as required.
Without adequate supporting documentation there is reduced assurance that billed services were properly billed, were actually performed, beneficiaries are receiving needed services, and limited resources are allocated appropriately.
Questioned costs totaling $17,402 in federal funds were noted in relation to the waiver services provider and support coordination services provider not providing adequate documentation to support billed services.
Recommendation:
LDH should ensure all departmental policies and federal regulations for waiver and support coordination services are enforced, including documentation to support claims and evidence that departures from the approved POC meet the needs of the beneficiary. LDH should consider additional provider training regarding documentation requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding stating they did not concur with three of the errors noted in the determination of inadequate controls. For the error that management concurred with, a corrective action plan was provided (B-19).
Auditor’s Additional Comments:
LDH noted in their response they did not concur with three of the errors noted in the determination of inadequate controls over waiver and support coordination providers and have concerns with LLA’s overreliance on documentation in determining control adequacy. According to CFR 200.303(a) the recipient must establish, document, and maintain effective internal control over federal awards that provides reasonable assurance that the recipient is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. As part of obtaining reasonable assurance that the system of internal control is operating effectively and implemented, documentation supporting these controls is necessary for the auditor to make these determinations. All control mechanisms that were in place, documented, and provided to the auditor were considered.
In addition, LDH noted that there was no error in the departures from the approved POC nor were there errors associated with the claims that were reported as having been billed at the incorrect rate. As stated in the finding, documentation could not be provided to substantiate the reason for the departure from the approved POC for either the number of units or the allocated billing rate per unit.
Finally, LDH noted that while claims were paid for waiver services that overlapped with non-waiver institutional services, there was no error as LDH’s established controls identified and addressed the overlap in billing. The exceptions noted for these claims were a result of LDH not providing sufficient supporting documentation to the auditor showing the recoupment of the payments for the overlapping shifts.
2024-026 - Inadequate Internal Controls over Eligibility Determinations
State Entity: Louisiana Department of Health (LDH)
Award Years: 2022, 2023, 2024
Award Numbers: 2205LA5MAP, 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Eligibility
Repeat Finding: Yes (Prior Year Finding No. 2023-024)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the fifth consecutive year, LDH lacked adequate internal controls over eligibility determinations in the Medical Assistance Program (Medicaid) and Children’s Health Insurance Program (CHIP) programs for the fiscal year ended June 30, 2024.
From a population of 73,333,570 Medicaid Per-Member-Per-Month (PMPM) and Fee-For-Service (FFS) payments totaling $13.3 billion, a non-statistical sample of 60 Medicaid payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for nineteen (31.67%) out of 60 payments tested.
The following errors were noted for Medicaid:
• For four payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For 11 payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For two payments, LDH did not follow policies to discontinue coverage at the end of the COVID -19 public health emergency for beneficiaries whose citizenship status remained unverified at the end of their reasonable opportunity period. These beneficiaries were therefore not validly enrolled during fiscal year 2024.
• For one payment, LDH failed to continue coverage on a beneficiary who had been determined eligible at renewal, causing a one-month lapse in coverage.
• For one payment, LDH personnel failed to verify Louisiana residency for the initial application on a beneficiary who resided out of state. The beneficiary’s application listed an out of state address in a border city. LDH failed to review the address to verify the exact state of residence, which would have resulted in a denial of coverage. Therefore, the beneficiary was not validly enrolled at initial application in fiscal year 2022.
In addition, from a population of 6,646,797 CHIP PMPM and FFS payments totaling $538 million, a non-statistical sample of 60 CHIP payments were selected and the corresponding beneficiary’s eligibility was tested to ensure compliance with eligibility federal regulations. Discrepancies related to the beneficiary’s case records regarding eligibility determination and redetermination were identified for eleven (18.33%) out of 60 payments tested.
The following errors were noted for CHIP:
• For two payments, inadequate or incorrect documentation was included in the case record to support the eligibility determination or redetermination.
• For five payments, issues in the Louisiana Medicaid Eligibility Determination System resulted in inadequate documentation within the case record to support the eligibility redetermination for the beneficiary.
• For three payments, LDH personnel did not accurately perform all required eligibility determinations before renewing the beneficiary.
• For one payment, LDH personnel failed to accurately perform all required eligibility determinations before enrolling the beneficiary, therefore the beneficiary was invalidly enrolled when they initially applied for eligibility in fiscal year 2023.
Criteria:
42 CFR 431, 42 CFR 435, and 42 CFR 457 require that in order to be considered eligible, a beneficiary must meet all eligibility factors and the beneficiary’s case record must include facts to support the agency’s eligibility decision. 42 CFR 435 and 457 also require annual renewal of eligibility.
LDH has outlined eligibility criteria and documentation to support determinations and renewals in its Medicaid Eligibility Manual.
Cause:
LDH did not adhere to established control procedures to ensure case records support eligibility determination and redeterminations per the federal regulations and the Medicaid Eligibility Manual.
Effect:
Proper eligibility determination and redetermination are critical to ensuring appropriate service eligibility, appropriate premium payments, and appropriate federal match rate on expenditures.
Questioned costs totaling $28,793 in federal funds were noted in relation to the Medicaid beneficiaries who were invalidly enrolled or whose renewal determination resulted in an erroneous certification of eligibility.
Questioned costs totaling $6,042 in federal funds were noted in relation to the CHIP beneficiary who was invalidly enrolled. We did not note any questioned costs related to the other errors.
Recommendation:
LDH should ensure its employees follow procedures and federal regulations relating to eligibility determinations and redeterminations in the Medicaid and CHIP programs to ensure the case records support the eligibility decisions.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding stating they did not concur with one Medicaid and six CHIP errors noted within the finding. For those errors that management concurred with, a corrective action plan was provided (B-24).
Auditor’s Additional Comments:
LDH noted in their response they did not concur with the errors noted for the Medicaid and CHIP renewals related to SNAP or express lane eligibility not being properly documented and indicated that system logs were provided. The LaMEDS log tables were considered by the auditor and no errors in the eligibility determination were reported. The errors noted in the finding relate to a weakness in internal controls as the system bug noted in the case record produced inadequate documentation. In addition, LDH stated in their response they did not concur with one CHIP finding for inadequate documentation regarding income to support the renewal determination. The error noted by the auditor did not relate specifically to the missing affidavit, but that sufficient support was not obtained by LDH to support the change in income from the application.
2024-027 - Noncompliance with and Inadequate Controls over Maternity Kick Payments
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: Yes (Prior Year Finding No. 2023-025)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not adhere to established policies and procedures regarding maternity kick payments for fiscal year 2024. Maternity kick payments are one-time payments made by LDH to reimburse the Healthy Louisiana Managed Care Organizations (MCOs) for the costs associated with pre- and post-partum maternal care, as well as the delivery event itself. These payments are paid to an MCO upon submission of satisfactory evidence of the event or treatment which is referred to as a triggering event.
During the period July 1, 2023, through June 30, 2024, LDH paid out 30,004 Medical Assistance Program (Medicaid) maternity kick payments totaling $307 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all Medicaid maternity kick payments, we identified 21 kick payments totaling $146,584 in federal funds that were paid to the Healthy Louisiana MCOs based on an ineligible triggering event.
During the period July 1, 2023, through June 30, 2024, LDH paid out 4,672 Children’s Health Insurance Program (CHIP) maternity kick payments totaling $47.7 million of state and federal funds to the Healthy Louisiana MCOs. In our review of all CHIP maternity kick payments, we identified three kick payments totaling $26,218 in federal funds that were paid to the Healthy Louisiana MCOs based on an ineligible triggering event.
Criteria:
Louisiana Administrative Code (LAC) Title 50, Part I, Section 3509(A)(5) states MCOs may be reimbursed a one-time supplemental lump sum payment, referred to as a kick payment. The kick payment is intended to cover the cost of a specific care event or treatment. Payment will be made to the MCO upon submission of satisfactory evidence of the event or treatment under Title XIX to the Social Security Act. In accordance with this guidance, LDH policies require an eligible triggering event to occur before a maternity kick payment can be made. LDH procedures also require that a review of kick payments be performed semi-annually.
Cause:
LDH did not adhere to the established policies and procedures regarding maternity kick payments and their reviews in FY 2024 failed to notate the coding error that allowed kick payments to be paid for ineligible triggering events.
Effect:
There is an increased risk that maternity kick payments are being paid to Healthy Louisiana MCOs for triggering events that may not have taken place or do not have satisfactory supporting evidence.
Recommendation:
LDH should strengthen existing policies and procedures to ensure all maternity kick payments are supported with an eligible triggering event before payment is made to the MCOs.
Management’s Response and Corrective Action Plan:
Management did not concur with the finding stating corrective action is not necessary, as recoveries were identified and processed as part of the regularly scheduled review process; however, LDH will modify the timing of its final quarterly reviews to ensure that payment/voids in June do not result in a finding (B-26).
Auditor’s Additional Comments:
As part of LDH’s procedures over maternity kick payments, LDH has an approved set logic in their claims processing system to pay maternity kick payments to MCOs when an eligible triggering event occurs. As LDH noted in their finding response, the errors noted in the finding were due to an error in this logic. While the logic error was discovered in their September 2024 review, adequate internal controls should be in place and operating effectively to ensure the logic is accurate at the time it is applied to transactions. In addition, recovery from the MCO also does not constitute the return of federal funds. While the MCO may have returned the funds to LDH, the funds must then be returned to the federal government on the next quarterly CMS 64 report. LDH did not provide evidence of this return.
2024-028 - Noncompliance with Disproportionate Share Hospital Payments
State Entity: Louisiana Department of Health (LDH)
Award Year: 2024
Award Number: 2405LA5MAP
Compliance Requirement: Activities Allowed or Unallowed
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
LDH exceeded the federally allocated 2016 Disproportionate Share Hospital (DSH) funding limit by $4,225,716. LDH makes payments to qualifying hospitals that serve a large number of Medical Assistance Program (Medicaid) and uninsured individuals for uncompensated costs. These payments are known as DSH payments.
Criteria:
Section 1923 of the Social Security Act and LDH's State Plan Amendment 4.19 limits DSH payments on a state-wide basis to the annual DSH allotment. The allotment is capped and represents the maximum federal matching payments a state is permitted to claim. The allotment does not have to be spent in the specific allotment year but can be applied indefinitely until completely utilized.
Cause:
The overage occurred due to an inadequate reconciliation between the agency’s actual DSH expenditures and the federal allotment. LDH failed to adequately update their tracking spreadsheet to include all 2016 DSH federal allotment payments that had previously been claimed and federally reimbursed.
Effect:
The 2016 DSH funding limit was exceeded and resulted in $4,225,716 in questioned costs.
Recommendation:
LDH should ensure an adequate review of the tracking spreadsheet to verify that all federal payments are included and to prevent the department from exceeding the federal DSH allotment in the future.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-28).
2024-029 - Noncompliance with Managed Care Provider Enrollment and Screening Requirement
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-026)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the seventh consecutive year, LDH did not enroll and screen all Healthy Louisiana managed care providers and dental managed care providers as required by federal regulations. In our review of the 23,170 providers paid during fiscal year 2024, it was determined that 8,209 (35%) of managed care and dental managed care providers were not enrolled and screened in accordance with federal regulations.
Criteria:
42 CFR 438.602 (2016 Managed Care Final Rule) and Section 5005 of the 21st Century Cures Act require that the enrollment process include providing the Medical Assistance Program (Medicaid) agency with the provider’s identifying information including the name, specialty, date of birth, Social Security number, national provider identifier, federal taxpayer identification number, and state license or certification number of the provider. Additionally, the state agency is required to screen enrolled providers, require certain disclosures, provide enhanced oversight of certain providers, and comply with reporting of adverse provider actions and provider terminations. By using the federally required process, managed care providers must participate in the same screening and enrollment process as Medicaid and Children’s Health Insurance Program (CHIP) fee-for-service providers.
Cause:
In July 2021, LDH launched the enrollment portal created by Gainwell, the state’s current provider enrollment vendor. Although the enrollment portal launched in fiscal year 2022 for existing providers as of March of 2022, new providers were not invited to enroll as this required an amendment to the contract with Gainwell and additional costs. Therefore, not all of the Healthy Louisiana managed care providers and dental managed care providers that received payments in fiscal year 2024 were enrolled and screened.
Effect:
LDH cannot ensure the accuracy of provider information obtained from the Louisiana Medicaid managed care plans and cannot ensure compliance with enrollment requirements defined by law and the Medicaid and CHIP state plan.
Recommendation:
LDH should ensure all providers are screened and enrolled as required by federal regulations.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-30).
2024-030 - Noncompliance with Medicaid Federal Matching and Reporting Requirements Related to a Means of Financing Reallocation
State Entity: Louisiana Department of Health (LDH)
Award Year: 2024
Award Number: 2405LA5MAP
Compliance Requirements: Matching, Level of Effort, Earmarking; Reporting
Repeat Finding: No
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
LDH did not have evidence that the state share of Medical Assistance Program (Medicaid) expenditures associated with $248,367,729 of federal expenditures reported on the June 30, 2024 CMS-64 quarterly federal expenditure report were expended using state funds as of the date of the report.
Criteria:
The state is required to pay part of the costs of providing Medicaid services and part of the costs of administering the program. The percentage of federal funding is determined based on the amount of the expenditures and the application of the Federal Medical Assistance Percentage that is determined for each state using a formula outlined in section 1905(b) of the Act (42 USC 1396d). 2 CFR 200.306(b) states that the basic criteria for acceptable matching include that the funds are verifiable from the non-federal entity’s records, are not included as contributions for any other federal award, and are not paid by the federal government under another federal award.
The CMS-64 quarterly federal expenditure report requires the state to certify that the required amount of state and/or local funds were available and used to match the state’s allowable expenditures included in the report, and such state and/or local funds were in accordance with all applicable federal requirements for the non-federal share match of expenditures. The CMS-64 report also requires the state to certify that the expenditures included in the report are based on the state's accounting of actual recorded expenditures.
Cause:
LDH reallocated the means of financing for Medicaid expenditures totaling $118,660,095 from being funded by state funds to federal carryforward funds as of June 30, 2024. As a result, the expenditures were no longer considered eligible state match expenditures, and therefore, the total amount of the Medicaid expenditures (total computable which includes both state and federal shares - $367,027,824) associated with the $118,660,095 should have been excluded from the June 30, 2024 CMS-64 report. However, when LDH prepared the June 30, 2024 CMS-64 report, they only removed the $118,660,095 from the total computable amount.
Effect:
By not removing the full $367,027,824, LDH reported $248,367,729 in Medicaid expenditures on the CMS-64 report that they were unable to provide evidence that the state share of expenditures were funded with allowable sources, resulting in federal questioned costs of $168,070,442.
The certifications attested to by LDH in the CMS-64 report upon submission to CMS were no longer accurate.
Recommendation:
LDH management should strengthen the system of internal controls over preparation and review of the quarterly CMS-64 reports to ensure expenditures are accurately reported and that the required amount of state and/or local funds are available and used to match the state’s allowable expenditures.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-32).
2024-031 - Weakness in Controls over and Noncompliance with Provider Overpayments
State Entity: Louisiana Department of Health (LDH)
Award Years: 2023, 2024
Award Numbers: 2305LA5021, 2305LA5MAP, 2405LA5021, 2405LA5MAP
Compliance Requirement: Special Tests and Provisions
Repeat Finding: Yes (Prior Year Finding No. 2023-027)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
For the second consecutive year, LDH did not have adequate controls in place to correctly identify the date of discovery for provider overpayments. From a population of 77,634 transactions totaling $147.1 million, a non-statistical sample of 59 provider overpayments was selected and tested to determine if LDH complied with the federal regulations regarding the refunding of the federal share of provider overpayments. For one (1.69%) out of 59 provider overpayments selected for testing, there was no supporting documentation available to identify the date of discovery. Therefore, the auditor was unable to ensure the federal share of the overpayment was returned timely.
In addition, LDH did not provide evidence that an adequate review was performed for three out of the four (75%) quarterly CMS-64 Line 9 reconciliations. These reviews ensure provider overpayments are reported timely and on the correct line of the CMS-64 federal expenditure quarterly report.
Criteria:
Pursuant to 1903(d)(2)(c) of the Act (42 USC 1396b), states have up to one year from the date of discovery of the overpayment to recover or attempt to recover the overpayment from the provider before the federal share must be refunded to CMS via the CMS federal expenditure quarterly report, regardless of whether recovery is made from the provider. The state must credit the federal share to CMS as outlined under 42 CFR 433.320(a)(2) either in the quarter in which the recovery is made or in the quarter in which the one-year period following discovery ends, whichever is earlier.
According to 42 CFR Part 433.316(c), the date of discovery is the earliest of the date on which any Medicaid agency official or other state office first notifies a provider in writing of an overpayment, the date on which a provider initially acknowledges a specific overpaid amount in writing to the Medicaid agency, or the date on which any state office or fiscal agent of the state initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
In addition, good internal controls require that policies and procedures are established and followed to ensure compliance with federal requirements.
Cause:
In December of 2023, as part of their corrective action plan from fiscal year 2023, LDH updated their policy to require the submitting department/agency to specifically identify the date of discovery when providing provider overpayment information to LDH. Although implementation of the new policy began in fiscal year 2024, the policy was not in effect for 6 months out of the year.
In addition, LDH did not ensure controls over provider overpayments were in place and properly monitored for every quarter during fiscal year 2024.
Effect:
By not appropriately identifying the date of discovery as defined by federal regulations, LDH cannot ensure that the federal share of provider overpayments that reach their one-year period are returned to CMS in the appropriate quarter.
Recommendation:
LDH should strengthen internal controls to ensure compliance with federal regulations regarding the timely return of the federal share of provider overpayment collections.
Management’s Response and Corrective Action Plan:
Management concurred with the finding and provided a corrective action plan (B-34).
2024-035 – Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP)
Award Years: 2008, 2016, 2021, 2022
Award Numbers: 1792-19, 4277-122, 4277-30, 4611-38, EMT-2022-FM-003
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-031)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) did not fully comply with the Federal Funding Accountability and Transparency Act (FFATA) reporting requirements for the Hazard Mitigation Grant (HM) and the Flood Mitigation Assistance (FMA) programs. This is the second consecutive year in which the FMA program was not compliant with FFATA reporting requirements.
Our procedures disclosed the following:
• In a non-statistical sample of 11 HM subawards tested totaling $15,127,069 from a population of 100 subawards totaling $76,083,506 made between July 1, 2023, and June 30, 2024, 4 subawards (36.4%) totaling $3,898,561 were submitted from 54 days to 117 days after the due date specified by federal regulations.
• Of the 15 FMA subawards tested totaling $31,209,266, which was 100% of the subawards made between February 29, 2024, and June 30, 2024, 12 subawards (80%) totaling $21,245,124 were submitted from 115 days to 176 days after the due date specified by federal regulations.
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FFATA Subaward Reporting System (FSRS) no later than the end of the month following the month in which the obligation was made.
Cause:
GOHSEP does not have adequate internal controls to ensure compliance with FFATA reporting requirements.
Effect:
Noncompliance with FFATA reporting requirements prevents the public from having access to accurate and timely information regarding the administration of federal awards.
Recommendation:
GOHSEP should strengthen internal controls to ensure that appropriate personnel are timely entering the required award information for FFATA reporting in accordance with federal requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-7). Management contends that the HM projects selected for the fiscal year 2024 audit were the same HM projects selected in the fiscal year 2023 audit and that the HM entries cited in this finding pre-date the agency’s corrective action. Management also stated that two of the FMA projects selected for the fiscal year 2024 audit were selected in the fiscal year 2023 audit and the remaining 10 projects in question were entered in calendar year 2024 as a part of the agency’s corrective action plan.
Auditor’s Additional Comments:
Submission of data into FSRS is required each time there is an additional obligation or amendment to a qualified project. Therefore, it is possible that a project was reviewed more than once if the project had multiple amendments during the audit period.
The HM program at GOHSEP was not audited for fiscal year 2023, and as such, there was no duplication in items reviewed in the current audit. In addition, because HM is a major federal program for fiscal year 2024, federal guidance requires the auditor to review the agency’s compliance with federal requirements throughout the entirety of the year.
The FMA obligations and/or amendments included in this finding occurred after February 2024, the date of management’s response to the prior year finding. Therefore, the current year finding does not include any FMA obligations or amendments that were previously reported. Also, the current year FMA obligations and amendments reviewed, although they may have been a part of management’s corrective action plan, were still submitted outside the required timeframe for reporting.
2024-035 – Noncompliance with Reporting Requirements for the Federal Funding Accountability and Transparency Act
State Entity: Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP)
Award Years: 2008, 2016, 2021, 2022
Award Numbers: 1792-19, 4277-122, 4277-30, 4611-38, EMT-2022-FM-003
Compliance Requirement: Reporting
Repeat Finding: Yes (Prior Year Finding No. 2023-031)
See Schedule of Findings and Questioned Costs for chart/table.
Condition:
The Governor’s Office of Homeland Security and Emergency Preparedness (GOHSEP) did not fully comply with the Federal Funding Accountability and Transparency Act (FFATA) reporting requirements for the Hazard Mitigation Grant (HM) and the Flood Mitigation Assistance (FMA) programs. This is the second consecutive year in which the FMA program was not compliant with FFATA reporting requirements.
Our procedures disclosed the following:
• In a non-statistical sample of 11 HM subawards tested totaling $15,127,069 from a population of 100 subawards totaling $76,083,506 made between July 1, 2023, and June 30, 2024, 4 subawards (36.4%) totaling $3,898,561 were submitted from 54 days to 117 days after the due date specified by federal regulations.
• Of the 15 FMA subawards tested totaling $31,209,266, which was 100% of the subawards made between February 29, 2024, and June 30, 2024, 12 subawards (80%) totaling $21,245,124 were submitted from 115 days to 176 days after the due date specified by federal regulations.
Criteria:
2 CFR Part 170 Appendix A(I)(a) requires the non-federal entity to report certain information about each obligating action that equals or exceeds $30,000 in federal funds for a subaward to a non-federal entity into the FFATA Subaward Reporting System (FSRS) no later than the end of the month following the month in which the obligation was made.
Cause:
GOHSEP does not have adequate internal controls to ensure compliance with FFATA reporting requirements.
Effect:
Noncompliance with FFATA reporting requirements prevents the public from having access to accurate and timely information regarding the administration of federal awards.
Recommendation:
GOHSEP should strengthen internal controls to ensure that appropriate personnel are timely entering the required award information for FFATA reporting in accordance with federal requirements.
Management’s Response and Corrective Action Plan:
Management partially concurred with the finding and provided a corrective action plan (B-7). Management contends that the HM projects selected for the fiscal year 2024 audit were the same HM projects selected in the fiscal year 2023 audit and that the HM entries cited in this finding pre-date the agency’s corrective action. Management also stated that two of the FMA projects selected for the fiscal year 2024 audit were selected in the fiscal year 2023 audit and the remaining 10 projects in question were entered in calendar year 2024 as a part of the agency’s corrective action plan.
Auditor’s Additional Comments:
Submission of data into FSRS is required each time there is an additional obligation or amendment to a qualified project. Therefore, it is possible that a project was reviewed more than once if the project had multiple amendments during the audit period.
The HM program at GOHSEP was not audited for fiscal year 2023, and as such, there was no duplication in items reviewed in the current audit. In addition, because HM is a major federal program for fiscal year 2024, federal guidance requires the auditor to review the agency’s compliance with federal requirements throughout the entirety of the year.
The FMA obligations and/or amendments included in this finding occurred after February 2024, the date of management’s response to the prior year finding. Therefore, the current year finding does not include any FMA obligations or amendments that were previously reported. Also, the current year FMA obligations and amendments reviewed, although they may have been a part of management’s corrective action plan, were still submitted outside the required timeframe for reporting.