Reference Number: 2024-002 Federal Program Title: Temporary Assistance for Needy Families (TANF) Federal Assistance Listing Number: 93.558 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: California Department of Social Services Federal Award Number and Year: N/A Name of County Department: Health and Human Services Category of Finding: Eligibility Instance of Noncompliance and Significant Deficiency Criteria § 206.10 Application, determination of eligibility and furnishing of assistance. (a) State plan requirements. A State plan under title I, IV-A, X, XIV, or XVI(AABD), of that Social Security Act shall provide that: (1) Each individual wishing to do so shall have the opportunity to apply for assistance under the plan without delay. Under this requirement: (i) Each individual may apply under whichever of the State plan plans he chooses; (ii) The agency shall require a written application, signed under a penalty of perjury, on a form prescribed by the State agency, from the applicant himself, or his authorized representative, or, where the applicant is incompetent or incapacitated, someone acting responsibly for him. When an individual is required to be included in an existing assistance unit pursuant to paragraph (a)(1)(vii), such individual will be considered to be included in the application, as of the date he is required to be included in the assistance unit; Condition During our audit of the TANF program, we noted that for one of the twenty-five sampled case files, the case file was incomplete and missing the fully executed and signed written application as required. Cause Due to turnover in program staff during the FY2022-2023 period, there were vacancies in positions that provide a review of case files to ensure all required documents are present and retained. This resulted in the signed copy of the application being misplaced and the unsigned copy of the application being retained. Effect Failure to maintain complete and accurate case files, as required by federal regulations, may result in assistance payments made to individuals to be considered unallowable. Questioned Costs The individual identified as having an incomplete case file received $6,216 in assistance payments during FY23-24. Context Total assistance payments for FY23-24 were $888,558. The sample was not a statistically valid sample. Recommendation We recommend the County consider revising policies and procedures that provide the ability for controls to operate during staff vacancies and ensure complete files are maintained for individuals receiving social services assistance payments.
Reference Number: 2024-003 Federal Program Title: Adoption Assistance Federal Assistance Listing Number: 93.659 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: California Department of Social Services Federal Award Number and Year: N/A Name of County Department: Health and Human Services Category of Finding: Eligibility Material Noncompliance and Material Weakness Criteria 42 USC 671 (A) Requisite features of a State plan • (20)(A) unless an election provided for in subparagraph (B) is made with respect to the State, provides procedures for criminal records checks for any prospective foster or adoptive parent before the foster or adoptive parent may be finally approved for placement of a child on whose behalf foster care maintenance payments or adoption assistance payments are to be made under the State plan under this part, including procedures requiring that- • (i) in any case in which a record check reveals a felony conviction for child abuse or neglect, for spousal abuse, for a crime against children (including child pornography), or for a crime involving violence, including rape, sexual assault, or homicide, but not including other physical assault or battery, if a State finds that a court of competent jurisdiction has determined that the felony was committed at any time, such final approval shall not be granted; and • (ii) in any case in which a record check reveals a felony conviction for physical assault, battery, or a drug-related offense, if a State finds that a court of competent jurisdiction has determined that the felony was committed within the past 5 years, such final approval shall not be granted; Condition During our audit of the Adoption Assistance program, we noted that the County was not maintaining documentation of the required background check performed on the adopting party within the case records. In 21 of 25 sampled case files, documentation for the required background check was not present in the case file. Cause Due to staffing limitations, the County has contracted adoption case management services to a vendor, which would then provide the County with a final case record for retention. Those case records did not include documentary evidence that the background check of the adopting party was performed. The County was unaware that the case records were required to maintain evidence of the background check and did not verify that the case records provided by the vendor were complete. Effect Failure to maintain complete and accurate case files may result in assistance payments made to the individuals to be considered unallowable. Questioned Costs Total assistance payments for the individuals whose case records were identified as missing background check documentation was $914,420 for FY23-24. Context Total adoption assistance payments for FY23-24 were $2,297,776. The sample was not a statistically valid sample. Recommendation We recommend the County research the program requirements for record retention and ensure policies and procedures are updated so that case records are maintained are in compliance for all individuals receiving adoption assistance payments, possibly including a checklist for case workers to ensure all required documents are within a case record files during finalization.
Reference Number: 2024-004 Federal Program Titles: Temporary Assistance for Needy Families (TANF) Foster Care – Title IV-E Federal Assistance Listing Numbers: 93.558 93.658 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: California Department of Social Services Federal Award Number and Year: N/A Name of County Department: Health and Human Services Category of Finding: Subrecipient Monitoring Material Noncompliance and Material Weakness Criteria In accordance with Title 2 of the Code of Federal Regulations (CFR) § 200.332, all pass-through entities (PTE) must: (a) Verify that the subrecipient is not excluded or disqualified in accordance with § 180.300. Verification methods are provided in § 180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred, or otherwise excluded from receiving Federal funds. (b) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the information provided below. A pass-through entity must provide the best available information when some of the information below is unavailable. A pass-through entity must provide the unavailable information when it is obtained. Required information includes: (1) Federal award identification. (i) Subrecipient’s name (must match the name associated with its unique entity identifier); (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated in the subaward; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity, including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required by the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of the Federal agency, pass-through entity, and contact information for awarding official of the pass-through entity; (xii) Assistance Listings title and number; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at the time of disbursement; (xiii) Identification of whether the Federal award is for research and development; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is used in accordance with § 200.414). (2) All requirements of the subaward, including requirements imposed by Federal statutes, regulations, and the terms and conditions of the Federal award; (3) Any additional requirements that the pass-through entity imposes on the subrecipient for the pass-through entity to meet its responsibilities under the Federal award. This includes information and certifications (see § 200.415) required for submitting financial and performance reports that the pass-through entity must provide to the Federal agency; (4) Indirect cost rate: (i) An approved indirect cost rate negotiated between the subrecipient and the Federal Government. If no approved rate exists, a pass-through entity must determine the appropriate rate in collaboration with the subrecipient. The indirect cost rate may be either: (A) An indirect cost rate negotiated between the pass-through entity and the subrecipient. These rates may be based on a prior negotiated rate between a different pass-through entity and the subrecipient, in which case the pass-through entity is not required to collect information justifying the rate but may elect to do so; or (B) The de minimis indirect cost rate. (ii) The pass-through entity must not require the use of the de minimis indirect cost rate if the subrecipient has an approved indirect cost rate negotiated with the Federal Government. Subrecipients may elect to use the cost allocation method to account for indirect costs in accordance with § 200.405(d). (5) A requirement that the subrecipient permit the pass-through entity and auditors to access the subrecipient’s records and financial statements for the pass-through entity to fulfill its monitoring requirements; and (6) Appropriate terms and conditions concerning the closeout of the subaward. (c) Evaluate each subrecipient’s fraud risk and risk of noncompliance with a subaward to determine the appropriate subrecipient monitoring described in paragraph (f) of this section. When evaluating a subrecipient’s risk, a pass-through entity should consider the following: (1) The subrecipient’s prior experience with the same or similar subawards; (2) The results of previous audits. This includes considering whether or not the subrecipient receives a Single Audit in accordance with subpart F and the extent to which the same or similar subawards have been audited as a major program; (3) Whether the subrecipient has new personnel or new or substantially changed systems; and (4) The extent and results of any Federal agency monitoring (for example, if the subrecipient also receives Federal awards directly from the Federal agency). (d) If appropriate, consider implementing specific conditions in a subaward as described in § 200.208 and notify the Federal agency of the specific conditions. (e) Monitor the activities of a subrecipient as necessary to ensure that the subrecipient complies with Federal statutes, regulations, and the terms and conditions of the subaward. The pass-through entity is responsible for monitoring the overall performance of a subrecipient to ensure that the goals and objectives of the subaward are achieved. In monitoring a subrecipient, a pass-through entity must: (1) Review financial and performance reports. (2) Ensure that the subrecipient takes corrective action on all significant developments that negatively affect the subaward. Significant developments include Single Audit findings related to the subaward, other audit findings, site visits, and written notifications from a subrecipient of adverse conditions which will impact their ability to meet the milestones or the objectives of a subaward. When significant developments negatively impact the subaward, a subrecipient must provide the pass-through entity with information on their plan for corrective action and any assistance needed to resolve the situation. (3) Issue a management decision for audit findings pertaining only to the Federal award provided to the subrecipient from the pass-through entity as required by § 200.521. (4) Resolve audit findings specifically related to the subaward. However, the pass-through entity is not responsible for resolving cross-cutting audit findings that apply to the subaward and other Federal awards or subawards. If a subrecipient has a current Single Audit report and has not been excluded from receiving Federal funding (meaning, has not been debarred or suspended), the pass-through entity may rely on the subrecipient’s cognizant agency for audit or oversight agency for audit to perform audit follow-up and make management decisions related to cross-cutting audit findings in accordance with section § 200.513(a)(4)(viii). Such reliance does not eliminate the responsibility of the pass-through entity to issue subawards that conform to agency and award-specific requirements, to manage risk through ongoing subaward monitoring, and to monitor the status of the findings that are specifically related to the subaward. (f) Depending upon the pass-through entity’s assessment of the risk posed by the subrecipient (as described in paragraph (c) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing site visits to review the subrecipient’s program operations; and (3) Arranging for agreed-upon-procedures engagements as described in § 200.425. (g) Verify that a subrecipient is audited as required by subpart F of this part. (h) Consider whether the results of a subrecipient’s audit, site visits, or other monitoring necessitate adjustments to the pass-through entity’s records. (i) Consider taking enforcement action against noncompliant subrecipients as described in § 200.339 and in program regulations. Condition During our audit of the TANF and Foster Care programs, we noted that the draft schedule of expenditures of federal awards did not include expenditures passed through to subrecipients. Upon inquiry, program management did not have a clear understanding of the difference between a subrecipient and a contractor and, as a result, had not identified, reported on, or monitored subrecipients. Subsequently, using the criteria in 2 CFR § 200.331 Subrecipient and contractor determinations, program management performed an analysis of payments made to contractors and identified the following: • TANF: two entities that received a total of $293,289 in payments during FY2023-24. • Foster Care: two entities that received a total of $139,607 in payments during FY2023-24. Of these we sampled two subrecipients from TANF and one subrecipient from Foster Care. Because program management did not previously identify any entities as subrecipients, the County did not comply with the requirements of subrecipient monitoring as follows: Both TANF and Foster Care: • The County could not demonstrate that a verification was performed to determine that the entities were not excluded or disqualified from receiving federal funds for all three subrecipients. While one entity’s contract included reference to 2 CFR Part 376 Nonprocurement, Debarment and Suspension, it did not specifically include a self-certification clause. • TANF Contracts: One contract was deficient and did not identify the contract as a federally funded subaward and did not include the required elements outlined in § 200.332 (b). The contract for the other entity was more prescriptive and included most of the elements in § 200.332 (b) but also did not have current language referencing the Uniform Guidance, which was effective in 2014 (Contract date was December 4, 2019), and instead referred to outdated requirements under OMB Circular A-133. One contract did not address indirect costs. One contract did not address provisions to permit the County as the grantor to access the entity’s records to audit or fulfill other monitoring responsibilities. Both contracts did not address the terms and conditions concerning the closeout of subawards. Both TANF and Foster Care: • The County did not perform the required fraud risk and risk of noncompliance assessment to determine the appropriate level of monitoring. • The County has not developed and documented a formal subrecipient monitoring plan. Upon inquiry, program management provided a bulleted list of their monitoring activities; however, reviews, meetings, action items, and follow-up were not formally documented to demonstrate the activities were performed. • The County received single audit reports from the two subrecipients identified; however, the County did not reconcile the amounts reported to its records. Foster Care TANF #1 TANF #2 Total Subrecipient’s SEFA $ 0 $ 101,886 $ 232,499 $ 334,385 County SEFA 105,530 43,689 249,560 399,884 Variance (105,530) 58,197 (17,601) (65,499) Cause Program staff were not aware of the requirements to evaluate and classify entities as contractor or subrecipient and did not understand the need to formalize a subrecipient monitoring program in accordance with §200.332. The cause can be partially contributed to turnover in the County’s Health and Human Services Department. Effect Failure to evaluate and identify subrecipients will cause the County to be out of compliance with its oversight responsibilities resulting in the potential for federal funds to be used inappropriately. Failure to provide all the required subaward information may result in subrecipients incorrectly reporting on federal pass-through awards in their Single Audit reports. Failure to have a formal monitoring program that includes risk assessment will result in the County inadequately monitoring the activities of subrecipients and hold them accountable to complete corrective action plans for identified noncompliance. Questioned Costs None. Context Fiscal year 2024 payments to the subrecipients were as listed: • TANF - $293,289 or 9% of total program expenditures. • Foster Care - $139,607 or 6% of total program expenditures. The sample was not a statistically valid sample. Identification as a Repeat Finding Previously reported as Finding 2023-003. Recommendation We recommend the County consider the following: 1. Provide comprehensive training to program managers on how to assess if an entity meets the criteria of a subrecipient as defined in § 200.331. 2. Formalize a subrecipient monitoring program based on the criteria in § 200.332. 3. Design a subrecipient agreement template to include all the elements required by 2 CFR § 200.332(b). Incorporate the use of the template in the contracting requirements for all departments receiving federal funds. 4. For existing subrecipients that were not provided the required elements, provide a letter or amended agreement to include all the required elements of 2 CFR § 200.332(b).
Reference Number: 2024-005 Federal Program Title: Medicaid Cluster / Medical Assistance Program Federal Assistance Listing Number: 93.778 Federal Agency: U.S. Department of Health and Human Services Pass-Through Entity: California Department of Health Care Services Federal Award Number and Year: N/A Name of County Department: Health and Human Services Category of Finding: Reporting Instance of Noncompliance and Material Weakness Criteria 2 CFR §200.302 Financial Management (a) Each State must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State's funds. All recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by the terms and conditions; and tracking expenditures to establish that funds have been used in accordance with Federal statutes, regulations, and the terms and conditions of the Federal award 2 CFR § 200.303 states that 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). The California Department of Health Care Services (State) requires that quarterly administrative expense claims (invoices) be submitted within 60 days of the quarter end and any supplemental claims and revision within six months of the fiscal year end and use the appropriate invoice template provided to the Counties by the State. Condition We selected 10 quarterly administrative expense claims submitted during fiscal year 2024 and noted the following: FY Quarter Program* Due Date Date Submitted Days Late 2024 1 HCPCFC (PMMO) 11/30/2023 12/20/2023 20 2024 1 CHDP 11/30/2023 12/19/2023 19 2024 1 CCS 11/30/2023 1/8/2024 39 2024 1 CCS 11/30/2023 5/24/2024 176 2024 2 CCS 2/28/2024 5/24/2024 86 * CHDP - Child Health and Disability Prevention HCPCFC - Health Care Program for Children in Foster Care HCPCFC (PMMO) - Health Care Program for Children in Foster Care - (Psychotropic Medication Monitoring and Oversight) CCS - California Children Services Program We also noted that two of the reports reviewed had clerical errors in the claim templates in the period dates, creating confusion regarding the reporting period to which the claims related. There were instances in which the period dates were incorrect throughout the claims and instances in which the dates were not consistent across all pages of the claims. Cause The County’s Health and Human Services Department does not have a formal process to monitor and track reporting deadlines or maintain documentation if communications were made with the grantor regarding the need for an extension. The department has experienced staffing constraints leading to delays in preparing, reviewing, and filing reports for the CHDP and HCPCFC programs. Effect Untimely submission of reports may result in funding delays and potential denial of funding by the grantor if the fiscal year’s six-month deadline is exceeded. In addition, insufficient review of report content, such as covered periods and accuracy of the invoice template may create confusion, further delay the receipt of funding, result in inaccurate amounts being claimed and extend the time necessary to resolve discrepancies during subsequent audits. Questioned Costs None identified. Context We identified 20 administrative expense claims filed in fiscal year 2024. This included eight claims related to the prior fiscal year that were filed significantly after the applicable deadlines. We selected 10 of the 20 claims for review. Identification as a Report Finding Previously reported as Finding 2023-004. The sample was not a statistically valid sample. Recommendation We recommend the County consider the following: 1. Establish a tracking system to identify all reports and their respective due dates. 2. Communicate with the grantor if required reports are expected to be submitted late and maintain correspondence. 3. Review employee responsibilities and workloads to properly allocate resources to support compliance needs.