Audit 364154

Finding 2022-002: Inaccurate SEFA - Material Weakness Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Name and Assistance Listing Number: CCDF Cluster, 93.575 Federal Award Identification Number and Year: 2101HICSC6, 2021 Name of Pass-through Entity: State of Hawaii Department of Human Services Criteria: In accordance with 2 CFR 200.302 (Financial Management), a grant recipient's financial management system must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.510 (Financial Statements) states in part that the auditee must prepare a schedule of expenditures of Federal awards ("SEFA") for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. At a minimum, the schedule must include: • All individual Federal programs by Federal agency. • For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. • Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. • Include the total amount provided to subrecipients from each Federal program. Condition: The Organization had a significant revision to the SEFA and management's initial review and approval process did not detect the error. Cause: The Organization's internal controls over the preparation and review of the SEFA were not operating effectively. Effect or Potential Effect: Inadequate controls over the preparation of the SEFA could result in financial misstatements or potential noncompliance. Questioned Costs: N/A Context: Management's initial review and approval of the SEFA did not identify $2.5M of expenditures that should have been recorded in the subsequent fiscal year. Identification as a Repeat Finding: This finding is not a repeat finding. Recommendation: We recommend the Organization strengthen its policies, procedures, and controls for the identification of federal awards to ensure a complete and accurate SEFA is prepared in a timely manner. Views of Responsible Officials: Management concurs with the finding and will implement a proper expenditure reporting process, reconciled monthly, to avoid recurrence during future audits.

Finding 2022-003: Reporting - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Name and Assistance Listing Number: CCDF Cluster, 93.575 Federal Award Identification Number and Year: 2101HICSC6, 2021 Name of Pass-through Entity: State of Hawaii Department of Human Services Criteria: Management is responsible for ensuring that all reports are submitted timely, in accordance with organizational policies and compliance requirements. Condition: During the audit we noted that the Organization had not retained documentation showing that the required reports were submitted timely. Cause: The Organization's financial management did not retain documentation indicating that the reports were submitted timely. Effect or Potential Effect: This condition may lead to non-compliance with reporting requirements. Questioned Costs: N/A Context: This issue was noted across multiple reporting instances. While management submitted complete and accurate reports, documentation confirming timely submission was not retained. Identification as a Repeat Finding: This finding is not a repeat finding. Recommendation: We recommend that the Organization implement policies, procedures, and controls to ensure that there are documented and retrievable records to indicate that reports were submitted timely. Views of Responsible Officials: Management concurs with the finding and will ensure that records are maintained to indicate timely submission of reports.

Finding 2022-002: Inaccurate SEFA - Material Weakness Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Name and Assistance Listing Number: CCDF Cluster, 93.575 Federal Award Identification Number and Year: 2101HICSC6, 2021 Name of Pass-through Entity: State of Hawaii Department of Human Services Criteria: In accordance with 2 CFR 200.302 (Financial Management), a grant recipient's financial management system must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the federal statutes, regulations, and the terms and conditions of the federal award. In addition, 2 CFR 200.510 (Financial Statements) states in part that the auditee must prepare a schedule of expenditures of Federal awards ("SEFA") for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with 2 CFR 200.502. At a minimum, the schedule must include: • All individual Federal programs by Federal agency. • For Federal awards received as a subrecipient, the name of the pass-through entity and identifying number assigned by the pass-through entity must be included. • Provide total Federal awards expended for each individual Federal program and the Assistance Listings Number or other identifying number when the Assistance Listings information is not available. • Include the total amount provided to subrecipients from each Federal program. Condition: The Organization had a significant revision to the SEFA and management's initial review and approval process did not detect the error. Cause: The Organization's internal controls over the preparation and review of the SEFA were not operating effectively. Effect or Potential Effect: Inadequate controls over the preparation of the SEFA could result in financial misstatements or potential noncompliance. Questioned Costs: N/A Context: Management's initial review and approval of the SEFA did not identify $2.5M of expenditures that should have been recorded in the subsequent fiscal year. Identification as a Repeat Finding: This finding is not a repeat finding. Recommendation: We recommend the Organization strengthen its policies, procedures, and controls for the identification of federal awards to ensure a complete and accurate SEFA is prepared in a timely manner. Views of Responsible Officials: Management concurs with the finding and will implement a proper expenditure reporting process, reconciled monthly, to avoid recurrence during future audits.

Finding 2022-003: Reporting - Significant Deficiency Name of Federal Agency: U.S. Department of Health and Human Services Federal Program Name and Assistance Listing Number: CCDF Cluster, 93.575 Federal Award Identification Number and Year: 2101HICSC6, 2021 Name of Pass-through Entity: State of Hawaii Department of Human Services Criteria: Management is responsible for ensuring that all reports are submitted timely, in accordance with organizational policies and compliance requirements. Condition: During the audit we noted that the Organization had not retained documentation showing that the required reports were submitted timely. Cause: The Organization's financial management did not retain documentation indicating that the reports were submitted timely. Effect or Potential Effect: This condition may lead to non-compliance with reporting requirements. Questioned Costs: N/A Context: This issue was noted across multiple reporting instances. While management submitted complete and accurate reports, documentation confirming timely submission was not retained. Identification as a Repeat Finding: This finding is not a repeat finding. Recommendation: We recommend that the Organization implement policies, procedures, and controls to ensure that there are documented and retrievable records to indicate that reports were submitted timely. Views of Responsible Officials: Management concurs with the finding and will ensure that records are maintained to indicate timely submission of reports.