Audit 395614

U.S. Department of Energy U.S. Department of Health and Human Services State of Vermont Agency of Human Services Material Weakness in internal control over compliance 2025-001: Compliance Finding – Special Tests and Provisions Weatherization Assistance for Low-Income Persons (ALN 81.042) and Low-Income Home Energy Assistance (ALN 93.568) Condition: A critical component of the analysis of internal controls over compliance is the quality control inspection form. During the assessment of Weatherization eligibility, the Quality Control Inspector (QCI) is a hallmark control serving as evidence of the job being ready for billing. Several jobs subject to monitoring by the Office of Economic Opportunity (OEO) were cited as having been improperly passed through the quality control process. Quality assurance visits by OEO identified multiple issues that should not have been passed through to finalization. These issues were of a nature that should have been identified and corrected prior to final approval had a proper QCI been performed. Despite these deficiencies, the units were approved and reported as complete. This indicates a breakdown in internal controls over the quality assurance process rather than an isolated error. Criteria or specific requirement: Each weatherization project will have a separate quality control inspection performed by an employee who is certified by the Building Performance Institute (BPI) as a QCI. Only homes that pass this QCI may be reported and invoiced to the State. A quality control inspection cannot be performed by a person who supervises the crew or by someone who has worked on the project. Quality control inspections performed by the QCI person, must at minimum include a final blower door test, final combustion appliance safety tests, final inspection of installed work and assurance that all work was done in compliance with the state of Vermont Weatherization Program Standards. If all is acceptable, the QCI shall acquire signature of client on QCI form. Cause: Lack of oversight by management - ineffective implementation of QCI procedures, including inadequate verification of work completion and insufficient supervisory review of QCI approvals. Questioned costs: No questioned costs were identified. Effect: The Organization approved and reported weatherization units that did not meet program requirements at the time of sign-off. This increases the risk that: noncompliant units are included in production reports, health and safety issues remain unaddressed, or costs associated with improperly approved units could be subject to disallowance upon monitoring or further review. Recommendation: We understand that ongoing cultural shifts have occurred in the weatherization department after the issues being identified by OEO. We recommend that the Organization reinforce QCI responsibilities and documentation standards to ensure that inspections are complete and in compliance with all federal and state requirements. In addition, the Organization can implement additional supervisory review of files before QCI is completed. As part of conversations with management, there was an increased emphasis on training – by providing refresher training to all QCI personnel throughout the year, this helps to ensure all requirements are met.

U.S. Department of Health and Human Services State of Vermont Department for Children and Families 2025-002: Compliance Finding – Special Tests and Provisions Community Services Block Grant (ALN 93.569) Condition: A board roster was obtained for September 25, 2025, the final board meeting of the fiscal year. This listing showed that the board was comprised of 8 members of the following designations: participant sector – 4 members (44%), private sector – 4 members (44%), and public sector – 1 member (11%). Criteria or specific requirement: All eligible entities in the state of Vermont shall be governed by a tripartite board as described in section 6768 of "The Community Services Block Grant Act". The board must fully participate in the development, planning, implementation, and evaluation of the program to serve low-income communities, and must be composed of 1/3 elected public officials, at least 1/3 representative of lowincome individuals and families in the neighborhood served, and the remaining members of business or community groups. Cause: Lack of oversight by management. Effect: The Organization was out of compliance with CSBG statutory governance requirements for a portion of the fiscal year. Continued noncompliance may increase the risk of corrective action by the pass-through entity and jeopardize future CSBG funding. Questioned costs: No questioned costs were identified. Recommendation: Adopt a board composition matrix with term tracking. This matrix can include sector designation, term start and end dates, public official designation expiration, as applicable, and vacancy status. This matrix can be reviewed at each board meeting to ensure timely addressing any issues or concerns. Establish written requirement that vacancies must be filled within 60–90 days. Require immediate escalation to the board chair or governance committee if ratios fall below statutory minimums. This demonstrates proactive compliance rather than reactive correction. Document Contingency Procedures - Create procedures specific to the Organization for situations where: public officials decline appointment, democratic elections fail to produce candidates, and / or board size changes mid-year. Require Written Annual Certifications - Have the board chair or governance committee sign an annual certification confirming the tripartite composition compliance documentation of democratic selection procedures. This provides clear internal control and audit trail.

U.S. Department of Energy U.S. Department of Health and Human Services State of Vermont Agency of Human Services 2025-003: Compliance finding – Eligibility Weatherization Assistance for Low-Income Persons (ALN 81.042) and Low-Income Home Energy Assistance (ALN 93.568) Condition: The Organization approved and provided Weatherization Assistance Program (WAP) services to a household located in a two-unit residential property. Based on a review of tenant income documentation, neither unit met the program’s income eligibility requirements at the time eligibility was determined. Despite this, the household was deemed eligible and weatherization services were performed and charged to the WAP grants. Criteria or specific requirement: For Department of Energy grants, one of the following criteria must be met within all multi-dwelling unit buildings 2(+) units in size regardless of if an individual building is part of a larger project or not: A. A minimum of 66% of the dwelling units within a multi-dwelling unit building must be occupied by a family/household that meets the income eligibility requirement, or B. A minimum of 50% of the dwelling units within duplexes, four-unit buildings and certain eligible types of large multi-family buildings must be occupied by a family that meets the income eligibility requirement, or C. The property meets the HUD based categorical eligibility requirements outlined within DOE’s WPN 22-5: Expansion of Client Eligibility in the Weatherization Assistance Program. Cause: Lack of oversight by management - The Organization did not adequately apply WAP eligibility requirements for multi-unit dwellings. Specifically, staff did not sufficiently verify and document income eligibility for each unit within the property prior to approving the dwelling for services. This indicates a breakdown in eligibility review controls and supervisory oversight for properties containing more than one unit. Effect: WAP funds were used to provide services to an ineligible property, resulting in unallowable program costs. This noncompliance increases the risk of questioned costs and potential repayment to the pass-through entity. Questioned costs: $4,048.39 Recommendation: We understand that ongoing cultural shifts have occurred in the weatherization department after the issues being identified by OEO. We recommend that the Organization strengthen eligibility determination procedures for multi-unit dwellings, including clear documentation requirements for each unit. Implementation of additional supervisory review of eligibility determinations for properties with more than one unit prior to service approval would be helpful. Providing targeted staff training on WAP income eligibility rules and treatment of multi-unit properties will continue to strengthen the team. Lastly, working with the pass-through entity to resolve questioned costs, including repayment if required.