Audit 394128

Significant Deficiency Federal Agency: U.S. Department of Health and Human Services Pass-through Entity: Illinois Department on Aging Federal Program: Aging Cluster (Federal Assistance Listing No.’s 93.044, 93.045, 93.053) Requirement: Earmarking, Level of Effort and Matching Finding 2025-001 – Noncompliance with Earmarking Requirement Criteria: Per Older Americans Act 306 (a)(2) and 307(a)(2) as well as 45 CFR section 1321.27(h)(3), the Agency is required to allocate certain percentages of their funds to certain expenses as required by their state agency on aging. One of these required allocations is legal assistance expenses where the Agency is required to expend at least 3.02% of their total Title – IIIB funds in this area, per the Illinois Department on Aging’s 2025-2028 Area Plan. Condition: It was noted during our audit that the Agency underspent on legal assistance as they only spent 2.30% of their Title - IIIB funds received during fiscal year 2025 on legal assistance. The Agency had the minimum legal assistance expense factored into their budget for Title – IIIB funds based on the total amount awarded by the Illinois Department on Aging but did not meet this budgeted amount. Cause: As the Agency has a multitude of grants, all with their own specific grant requirements to follow, it is expectedly difficult to ensure that all requirements are being met by the Agency. Due to the number of grants and requirements, it is very important that the Agency has a process of ensuring compliance is maintained with all grant requirements. Effect: Without proper procedures to ensure grant funds are spent where planned, funds can be used for purposes other than intended by the granting agency, and therefore not for the intended purpose of the grant. This could result in inefficient use of funds as well as noncompliance with grant agreements which could lead to adverse conditions with the grantor of the funds. Questioned Costs: No questioned costs. Perspective Information: This appears to be an isolated event. Recommendation: We recommend the Agency implement a process to review earmarking requirements when budgeting so the Agency is aware of the minimums that must be met for the year, and set aside funds in advance so they are available for the intended purpose. Once these minimums are budgeted for, a monthly or quarterly review should be performed to ensure that actual expenses for these minimums are met as required. Response: West Central Illinois Area Agency on Aging will strengthen its budgeting and monitoring process to ensure required minimum spending levels are met. Beginning in FY2026, staff will verify earmarked requirements during budget preparation and review expenses quarterly to confirm compliance. Responsibility for monitoring has been assigned to fiscal leadership, with review and oversight by Director, Assistant Director, as well as Program Manager. The Agency believes this was an isolated incident and expects these steps to prevent recurrence in accordance with requirements from the Illinois Department on Aging.

Significant Deficiency Finding 2025-002 – Controls over Grant Reporting and Monitoring (Repeat Finding) Federal Agency: U.S. Department of Health and Human Services Pass-through Entity: Illinois Department on Aging Federal Program: Aging Cluster (Federal Assistance Listing No.’s 93.044, 93.045, 93.053) Requirement: Allowable Costs and Reporting Criteria: To ensure the correctness and completeness of the various required grant reporting performed by the Agency, it is critical to have a process in place to regularly reconcile underlying financial records with the grant reports and ensure the underlying costs in the financial records can be supported. It is also imperative to have monitoring procedures in place to ensure compliance with all grant requirements. Condition: During the course of our audit, we noted that the Agency implemented reconciliations between the general ledger and the grant reports. Management is using several worksheets to determine the grant report amounts, and it is evident that the Agency is allotting adequate time to prepare the grant reporting. However, the reconciliations performed by the Agency displayed discrepancies between the general ledger and the grant reports that were not resolved, specifically amounts that were passed through to subrecipients. Rather than utilizing the Agency’s general ledger to report expenses on grant reports, the Agency used subrecipients’ monthly financial reports that were submitted to the Agency to report expenses on the Agency’s grant reports. Additionally, various grant reporting requires input of duplicate information for certain line items, however, these reports contained different amounts for line items that should match. We also noted that a compliance review is not being performed to ensure adherence to all grant requirements. Cause: The Agency continues to improve in this area over prior years. A reconciliation process was implemented; however, discrepancies in reconciliations were noted. All reporting was not derived from general ledger expense accounts nor were reports reconciled to the general ledger expense accounts. There was no consistency in expenses that were being reported on multiple grant reports. Due to the volume of grant reports required to be submitted, the grant reporting process is difficult to maintain. We were also unable to obtain monitoring documentation, indicating that a formal process has not been developed to ensure grant compliance. Effect: Without timely reconciliation and monitoring processes, grant expenditures can be omitted or overstated on the submitted grant reports and other grant noncompliance could be overlooked. This could result in missed funding or noncompliance with the grant agreement which could lead to adverse conditions with the grantor. Questioned Costs: No questioned costs. Perspective Information: This appears to be a systemic event as these conditions were noted on most of the grants that were tested. Recommendation: We recommend the Agency continue to improve its reconciliation process and further enhance reconciliations to ensure information can be cross-referenced between the various reports required to be submitted. Grant reporting should be performed using the general ledger expense accounts to ensure all expenses are captured. Reconciliations should be presented in a clear and concise manner to enable another party to review and approve the reports before submission to the grantor. This should be attainable as each grant is coded separately in the accounting system. We also recommend the Agency require a periodic review of adherence to the various grant compliance requirements and note that such a review was performed. Response: The Agency will improve its reconciliation and reporting procedures. All grant reports will be prepared using general ledger data and reviewed before submission. Monthly reconciliations and periodic compliance checks will be performed and documented. These actions are intended to improve accuracy, consistency, and compliance across all grants. Monthly check-ins for WCIAAA staff currently take place to help improve communication, monitoring, and oversight of all grant and fiscal reporting.