Audit 402758

Assistance Listing, Federal Agency, and Program Name - 93.045/93.053, Department of Health and Human Services, Aging Cluster Federal Award Identification Number and Year - N/A Pass through Entity - Area Aging on Aging 1C Finding Type - Material weakness Repeat Finding - Yes 2024-15 Criteria - Per 2 CFR 200.303, nonfederal entities must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Per 2 CFR 200.318(b), recipients must maintain oversight to ensure contractors perform in accordance with the terms, conditions, and specifications of their contracts. Per the “Minimum Nutrition Program Standards” issued Commission on Services to the Aging, individuals receiving certain nutrition benefits to undergo a periodic reassessment of eligibility that includes obtaining confirmation of medical necessity for certain benefit levels. Condition - The County engaged a third party contractor to perform certain eligibility reassessments, including obtaining verification of medical necessity, when required. While the County had a process in place to properly identify when reassessment was required and to follow up with the contractor about the status of reassessments, controls did not ensure the third party contractor followed through on reassessments on a timely basis. Questioned Costs - None If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - N/A Identification of How Questioned Costs Were Computed - N/A Context - The County is responsible for ensuring participants who receive meals are eligible under the terms of the grant. The County did not have a control over home delivered meal participants that ensured the third party contractor timely reassessed participants every six months. 3 of the 43 samples selected did not have updated assessment forms within six months of receiving meals and 17 of the 43 samples did not have updated assessment forms. Cause and Effect - The County's controls were not adequate to ensure that the third party contractor was reassessing participants every six months. The lack of controls could result in the County providing meals to ineligible participants. Recommendation - We recommend the County update its policy on the reassessment process, including actions to be taken when participants refuse to complete the reassessment or cannot be contacted. This plan should also include a schedule for actions to be taken when participants do not complete reassessment submissions timely. The County should also implement the appropriate controls to monitor the third-party contractor and ensure reassessments are being performed timely. Views of Responsible Officials and Corrective Action Plan - The Department of Senior Services would like to clarify that the third-party contractor is contracted through The Senior Alliance, the Area Agency on Aging for region 1 C and not Wayne County. Wayne County Senior Services will continue to monitor the third-party vendor for timely assessments and reassessments through the existing controls which include: • Providing the third-party contractor monthly lists of clients in need of assessment/reassessment • Generating monthly lists of outstanding reassessments (clients not reassessed from the monthly list) • Reminding clients of the requirement for six-month reassessments • Obtaining updated information (phone numbers, emergency contacts, etc.) twice per year • Providing updated information to third-party contractor • Documentation of communicated information regarding third-party contractor’s performance to The Senior Alliance

Assistance Listing, Federal Agency, and Program Name - 93.045/93.053, Department of Health and Human Services, Aging Cluster Federal Award Identification Number and Year - N/A Pass through Entity - Area Aging on Aging 1C Finding Type - Material weakness Repeat Finding - No Criteria - Uniform Guidance at 2 CFR 200.510(b) requires the auditee to prepare a Schedule of Expenditures of Federal Awards (SEFA) that accurately reports total federal expenditures for each federal program. In addition, effective internal control over compliance, as required by 2 CFR 200.303, requires controls that ensure expenditures reported on the SEFA are complete, accurate, and properly reconciled to underlying accounting records and amounts billed to the funding agency. Condition - The County did not maintain effective internal control over the reconciliation of expenditures reported on the Schedule of Expenditures of Federal Awards to amounts billed to the funding agency. If questioned costs are not determinable, description of why known questioned costs were undetermined or otherwise could not be reported - None Identification of How Questioned Costs Were Computed - N/A Context - The SEFA is a key component of the Single Audit and serves as the primary basis for determining major programs subject to audit under the Uniform Guidance. As part of the SEFA preparation process, management compiles federal expenditures from multiple sources, including underlying accounting records and amounts billed to funding agencies. Accurate reconciliation of these sources is critical to ensure that federal expenditures are reported completely and accurately, and that major program determinations are appropriately made. As a result of the audit, it was identified that expenditures related to the Aging Cluster were understated by approximately $126,000 on the preliminary SEFA due to the omission of expenditures that had been billed to the funding agency but backed out of amounts reported on the SEFA during the reconciliation process. Management recorded an adjustment to correct the understatement prior to issuance of the final SEFA. Cause and Effect - The County’s SEFA preparation process did not include a sufficiently designed and implemented control to ensure the accuracy of reconciling items between expenditures reported on the SEFA to amounts billed to the funding agency. As a result of this deficiency, expenditures in the Aging Cluster were understated by approximately $126,000 on the preliminary SEFA. The correction of this error on the final SEFA increased total expenditures for the Aging Cluster, resulting in the program being classified as a Type A program rather than a Type B program for major program determination purposes. Because the deficiency resulted in a material misstatement of the SEFA that was not prevented or detected by internal control, it is considered a material weakness in internal control over compliance. Recommendation - We recommend that management design and implement effective controls over the preparation of the SEFA, including maintaining adequate support for adjustments and reconciling items. Such controls should be performed and reviewed by personnel independent of the SEFA preparation process to ensure the completeness and accuracy of federal expenditures reported. Views of Responsible Officials and Planned Corrective Actions - The County has established procedures for reconciling general ledger activity to supporting documentation and Federal Financial Reports (FFRs/FSRs) throughout the fiscal year, including additional reconciliation procedures performed at year end to capture late or adjusting entries. The condition was further impacted by timing differences between departmental reporting and subsequent adjusting entries, as well as the aggregation of adjustments across multiple programs without sufficient program-level detail at the time of review. While follow-up was initiated to obtain supporting breakdowns, the process did not require resolution of these items prior to final classification and inclusion in year-end reporting. The County is strengthening internal controls over grant-related financial activity and SEFA preparation by enhancing and enforcing requirements for accurate transaction recording, supporting documentation, and independent validation. Key improvements include: • Enhanced documentation and classification requirements for grant-related entries • Strengthened review and validation controls to ensure proper support and classification • Improved reconciliation and adjustment protocols, including postreporting revalidation • Control enforcement and escalation for unsupported or unresolved items • Training and guidance on federal compliance requirements