Audit 369025

Material Weakness/Noncompliance – Suspension and Debarment 31 CFR 19 gives regulatory effect to the Department of Treasury for 2 CFR Section 180.305 which states that Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred or whose principles are suspended or debarred, unless the Federal agency responsible for the transaction grants an exception under 2 CFR Section 180.135. “Covered transactions” include nonprocurement or procurement transactions at the primary tier, between a Federal agency and a person; or at the lower tier, between a participant in a covered transaction and another person. Procurement contracts for goods and services awarded under a nonprocurement transaction (e.g., grant or cooperative agreement) are covered transactions if the contracts are expected to equal or exceed $25,000 or meet certain other specified criteria outlined in 2 CFR § 180.220s. All nonprocurement transactions (i.e. subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless listed in the exemptions in 2 CFR § 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by: (1) checking the System for Award Management (SAM) Exclusions maintained by the General Services Administration (GSA) and available (Sam.gov), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR 180.300). The County did not have the proper internal controls in place to verify that all entities, with whom the County had entered into covered transactions, had not been suspended or debarred. Due to the deficient internal control structure, the required verification was not completed for any of the vendors sampled with covered transactions in the Coronavirus State and Local Fiscal Recovery Funds during Fiscal Year 2024. Those transactions had a payment to a vendor of equal or greater than $25,000 and there was no evidence the County checked the SAM exclusions, collected a certification from the entity, or added a clause or condition to the covered transaction with the vendor. Failing to have the appropriate internal controls in place may result in suspended or debarred vendors receiving federal funds. Prior to contracting with vendors that will be paid with federal funds, the County should verify the vendor is not suspended or debarred by checking the SAM exclusions, collecting a certification from the vendor, or adding a clause or condition to the covered transaction with the vendor.

Material Weakness/Noncompliance – Allowable Costs/Cost Principles 2 CFR 200 outlines the following policies required for a County spending Coronavirus State and Local Fiscal Recovery Funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; • 2 CFR 200.430 for allowability of compensation costs; 2 CFR 200.464(a)(2) for reimbursement of relocation costs; During testing we noted that the County Commissioner’s department did not have sufficient written policies addressing the above requirements. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.

Material Weakness/Noncompliance – Activities Allowed or Unallowed, Allowable Costs/Cost Principles and Special Tests and Provisions – Payment Rate Setting and Application 2 CFR Part 200, Subpart E and appendices III-VII establish principles and standards for determining allowable direct and indirect costs for Federal awards. • Be necessary and reasonable for the performance of the Federal award and be allocable thereto under the principles in 2 CFR Part 200, Subpart E. • Conform to any limitations or exclusions set forth in 2 CFR Part 200, Subpart E or in the Federal award as to types or amount of cost items. • Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the non-Federal entity. • Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost. • Be determined in accordance with generally accepted accounting principles (GAAP), except, for State and local governments and Indian tribes only, as otherwise provided for in 2 CFR Part 200. • Not be included as a cost or used to meet cost-sharing or matching requirements of any other federally financed program in either the current or a prior period. • Be adequately documented. 45 CFR Section 1356.21(m)(1) and 45 CFR Section 1356.60 (a)(1) and (c) establish guidelines for proper allocation of rates between maintenance and administrative expenditures in conformance with cost principles. Maintenance and administrative expenditure payments need to be properly calculated and in accordance with Title IV-E agency’s policies to ensure only allowable costs are charged to the program. Rates used should be based upon established payment rates per the Title IV-Es agency’s rate schedule for maintenance and administrative costs. The agency should establish foster care maintenance and administrative expenditure payment rates which provide only for costs which are necessary for the proper and efficient administration of the program, and which are for allowable costs Further, periodic review of payment rates should be performed to ensure the rates’ continuing appropriateness. During testing we identified instances where amounts claimed did not agree to amounts invoiced by providers. In addition, we identified several instances where the amount reimbursed was not calculated correctly. There were instances of over and underpayments as a result of clerical errors in rates entered into the SAWCIS, the statewide automated child welfare information system that assists in payment processing and case management. These over/under payments resulted in noncompliance with activities allowed or unallowed, allowable costs/cost principles, and special tests and provisions – payment rate setting and application as described above. We recommend the Children Services department implement additional monitoring procedures to ensure amounts claimed and amounts requested for reimbursement are input correctly and calculated in accordance with applicable compliance requirements.

2 CFR 200 outlines the following policies required for a County spending for Foster Care Title IV-E funds: • 2 CFR 200.302(b)(7) for determining the allowability of costs in accordance with Subpart E-Cost Principles; During testing we noted that the County Children Services department did not have sufficient written policies addressing the above requirement. Failure to adopt and implement policies could lead to noncompliance with federal requirements. We recommend the County approve and implement the above policies to ensure compliance with federal requirements.