Audit 394974

Finding 2025-001: Material Weakness in Internal Control Over Compliance and Non-Material Noncompliance Federal Awarding Agency: Department of Health and Human Services (HHS) State Awarding Agency: Virginia Department of Social Services (VDSS) Program Name: Medicaid Cluster ALN: 93.778 Compliance Requirement: Eligibility Prior Year Audit Finding Number: 2024-002 Criteria: Per Title 2 Subpart §200.303, “The non-Federal entity must: (a) Establish and maintain 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 (COSO). (b) Comply with Federal statutes, regulations, and the terms and conditions of the Federal awards. (c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards. (d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings.” Per Subchapter M1520.001 of the Virginia Medical Assistance Eligibility Manual, “An annual review of all of the enrollee's eligibility requirements is called a ‘redetermination’ or ‘renewal’.” A renewal of the enrollee's eligibility must be completed at least once every twelve (12) months. Condition: During our testing of sixty (60) beneficiaries that were enrolled in the Medical Assistance Program, we noted sixteen (16) beneficiaries continued to receive medical assistance when an eligibility redetermination was not performed within twelve (12) months of the prior eligibility determination. For all sixteen (16) of these instances, the redeterminations were performed late with beneficiaries found to have been eligible. Additionally, we noted one (1) instance in which a beneficiary did not provide required verification documentation by the required due date, however, temporary benefits were not terminated timely. Cause: The County does not appear to have adequate policies and procedures in place to ensure a consistent and systematic review of the beneficiary case files. Effect: The Medical Assistance Program as operated by the County was not in compliance with the eligibility compliance requirement as of June 30, 2025. Additionally, failure to timely perform renewals could result in medical assistance rendered to ineligible individuals. Medical assistance payments to individuals are paid directly by the state. Recommendation: The County should implement a plan to enhance internal controls related to participant eligibility to ensure renewals are occurring on a timely basis and files contain adequate supporting documentation in accordance with the Uniform Guidance. The County should also consider increasing the number of haphazard reviews of eligibility determinations performed throughout the year. Questioned costs: Not determinable. Context: This is a condition based on testing of the County’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a nonstatistical method. Views of Responsible Officials: The County concurs with the auditor’s finding and recommendation.

Finding: 2025-002: Significant Deficiency in Internal Control Over Compliance and Non-Material Noncompliance Federal Awarding Agency: Department of Housing and Urban Development (HUD) State Awarding Agency: Not applicable (Direct Award) Program Name: Housing Voucher Cluster ALN: 14.871 and 14.879 Compliance Requirement: Special Test-Housing Quality Standards (HQS) Inspection and Enforcement Prior Year Finding Number: 2024-003 Criteria: Per 24 CFR 982.404 “The public housing authority (“PHA”) must not make any housing assistance payments (HAP) for a dwelling unit that fails to meet the HQS, unless the owner corrects the defect within the period specified by the PHA and the PHA verifies the correction. If a defect is life threatening, the owner must correct the defect within no more than 24 hours. For other defects, the owner must correct the defect within no more than 30 calendar days (or any PHA-approved extension).” Per 2 CFR Section 200.303, non-Federal entities receiving federal awards must establish and maintain internal control designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the federal award. Per 24 CFR 982.405, “The PHA must inspect the unit leased to a family prior to the initial term of the lease, at least biennially during assisted occupancy, and at other times as needed, to determine if the unit meets the Housing Quality Standards (HQS).” Condition: During our testing of sixty (60) inspections, we noted three (3) instances where a unit was notinspected on the required biennial basis. Additionally, we noted that the County failed to maintain appropriate logs or records of failed HQS inspectionsduring the year. However, during our testing of the six (6) units that failed HQS, the County appropriatelydocumented the enforcement of the HQS, properly notified the unit owners of the reported deficiencies, andperformed timely follow-up inspections. Cause: The County does not appear to have adequate policies and procedures in place to ensure inspections are performed on a timely basis. The County converted to a new HQS tracking system during current fiscal year which caused challenges with maintaining appropriate logs or records of failed HQS inspections. Effect: The County’s control environment over HQS enforcements did not ensure inspections were timely performed. As a result, the County was not in compliance with the HQS enforcement requirements as of June 30, 2025. Non-compliance with these requirements creates a risk that the County may provide federal funds to tenants of ineligible units. Recommendation: The recommendation is for the County to review their client management software system’s functionality to determine whether an electronic process for scheduling and follow-up or comprehensive reporting can be identified to improve efficiency and eliminate the potential for human error. If an electronic process or comprehensive reporting is not available, or cannot fully cover the deficiency, the recommendation is for the County to identify measures that streamline their current process and to eliminate non-compliance. Potential examples include having the Housing Choice Voucher (HCV) Program Manager review and schedule upcoming inspections in advance, checking in with the Inspector on a monthly basis to review inspections that are due and inspections that are scheduled, and having the HCV Program Manager ensure that each scheduled inspection is documented timely in the system. Questioned costs: None. Context: This is a condition based on testing of the County’s compliance with specified requirements. The prevalence of the finding is detailed in the condition section above. The samples were selected using a non-statistical method. Views of Responsible Officials: The County concurs with the auditor’s finding and recommendation.