2022-059 Department of Human Services Ensure issued benefits are accurate Federal Awarding Agency: U.S. Department of Agriculture Assistance Listing Number and Name: 10.542 Pandemic EBT Food Benefits (COVID-19) Federal Award Numbers and Years: Not available (COVID-19) Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $3,692,215 (known); $13,554,666 (likely) (COVID-19) Criteria: Public Law 116-127; 2 CFR 200.303 The federal requirements for the Pandemic EBT (P-EBT) program require state agencies follow their approved state plan. Part of Oregon?s simplifying assumptions in their state plan was that the benefit amount was determined at the school level, not the individual level, based on the school?s operating status, for October 2020 ? May 2021. As part of Oregon?s Ready Schools, Safe Learners program, schools were required to weekly report their operating status/instructional model to the Oregon Department of Education (ODE). In fiscal year 2022, the Department of Human Services (department) paid retroactive P-EBT benefits for children related to the 2020-2021 school year. This sample population consisted of institutions (schools and other educational facilities) and months in which children at the institutions received benefits, totaling $391 million. We selected a random sample of 40 institutions and a random month to determine if the benefits provided to the children, based on the status reported by the institution, were accurate. We identified 4 institutions, for April/May, where the benefit paid status of the institution was not the same as reported by the institution to ODE. In all 4 cases, the benefits paid were at a higher level resulting in questioned costs of $38,931 and likely questioned costs of $9.2 million. One of the simplifying assumptions for the P-EBT program, approved in Oregon?s state plan, was ?Oregon will have a limited reconsideration process to revisit benefit allotments at a school level.? However, the department allowed institutions to update their status without additional review, explanation, or documentation. The department could not provide the auditors any support for the changes made by the institutions. Furthermore, the Oregon Governor issued a directive to schools, on March 5, 2021, to begin a phased approach to require all public schools to provide in-person instruction through either a fully on-site or hybrid model on or before the week of April 19, 2021, for all schools. Although benefits issued continued to decrease as the school year end approached, in May 2021, 26% of the institution?s benefits paid were for fully virtual totaling $17 million. We judgmentally selected 36 institutions classified as fully virtual in May with benefits totaling $7.9 million. For 25 institutions, the benefit paid status did not agree to the status reported by the institution to ODE resulting in questioned costs of $3,653,284 and likely questioned costs of $4.4 million. We recommend DHS perform review to identify any additional discrepancies between benefits paid and the institutions reported status, to determine if payments were appropriate, and communicate with the federal awarding agency to determine if repayment is necessary.
2022-018 Oregon Housing and Community Services Controls are needed to ensure program expenditures are allowable Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: $245,362 (known) (COVID-19) Criteria: 24 CFR 576.100; CPD-21-08 III.E.3 Emergency Solutions Grants-Cares Act (ESG-CV) funds may be used for the five regular Emergency Solutions Grants (ESG) program components, as well as administrative activities: street outreach, emergency shelter, homelessness prevention, rapid re-housing, and homeless management information systems (HMIS). They may also be used for additional activities including, but not limited to, temporary emergency shelter, hazard pay, handwashing stations, cell phones and internet, personal protective equipment, and laundry. The funds are disbursed to the subrecipients after reimbursement requests are submitted.? Federal funds totaling $31,894,565 were distributed to 44 subrecipients during fiscal year 2022. We randomly selected 61 individual distributions made by the department to subrecipients. Subsequently, we randomly selected an expenditure from each disbursement request and then judgmentally selected additional expenditures from select disbursements. While gaining an understanding of the department?s internal control process, we learned the review process for subrecipient disbursement requests did not include a detailed verification that underlying expenditures were for allowable activities and costs. Given the department?s incomplete review process, we were unable to verify compliance by testing those reviews. The department requested supporting documentation from the subrecipients, documentation that should have been reviewed and retained by the department, for the required audit procedures to be performed. Our audit procedures were performed in three stages. First, we randomly selected 61 individual distributions made by the department to subrecipients, totaling $5,580,560. These disbursements generally consisted of reimbursement for multiple expenditures made by a subrecipient. Next, we asked the department to request a listing of expenditures from the subrecipients related to those disbursements. Finally, if provided, we agreed the listings to the disbursement and randomly and judgmentally selected individual expenditures from the listings for testing. We were unable to perform any review of 20 disbursements either because we did not receive a listing of the subrecipient?s expenditures, or the listing did not agree to the disbursement selected for testing. These disbursements related to 10 of the 44?subrecipients receiving funds in fiscal year 2022 and $1,475,345 of the $5,580,560 in disbursements selected for testing noted above. From the expenditure listings we did receive, we randomly and judgmentally selected individual expenditures to determine whether the supporting documentation agreed to the amount requested for reimbursement by the subrecipient. Of those 41 individual transactions selected for testing, there was inadequate or no supporting documentation provided for 29 items, and one instance where the request exceeded the support. These exceptions resulted in total questioned costs of $245,362. If requests for funds are not supported by documented expenditures, the department could be unknowingly reimbursing subrecipients for unallowable costs and activities. We recommend management implement internal controls to ensure subrecipient reimbursements are for allowable expenditures.
2022-019 Oregon Housing and Community Services Controls are needed to ensure subrecipients? compliance with equipment and real property requirements Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Equipment and Real Property Management Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.311; 2 CFR 200.313 There are specific requirements when equipment is purchased using federal funds and in use. At a minimum, procedures for managing equipment must meet the following requirements: ? Property records must be maintained that include key details (e.g. property description, ID number, Title, etc); ? A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years; ? A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated; and ? Adequate maintenance procedures must be developed to keep the property in good condition. Real property purchased must be used for the originally authorized purpose as long as needed for that purpose. When real property is no longer needed for the originally authorized purpose, the non-federal entity must obtain disposition instructions from either the federal awarding agency or pass through entity. During our review, we determined OHCS was not monitoring its subrecipients to ensure the equipment and real property requirements were being met. Because subrecipients were not being monitored, we were unable to determine if there was a population of equipment and real property on which to perform our audit testing procedure. As a result, the department may not be in compliance with federal equipment and real property requirements. We recommend department management develop internal controls to ensure compliance with federal requirements for equipment and real property.
2022-020 Oregon Housing and Community Services Controls are needed to ensure buildings renovated for use as emergency homeless shelters are maintained as shelters for the period required Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Special Tests and Provisions Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 24 CFR 576.102(c) Federal regulations require that buildings renovated with ESG-CV funds for use as emergency homeless shelters must be maintained as shelters for not less than a period of 3 or 10 years, depending on the type of renovation and value of the building. Initial inquiries with program staff determined that the department was not aware whether its subrecipients were using program funds to renovate buildings for use as emergency homeless shelters. Subsequently, program staff indicated the information may be contained in subrecipient implementation reports. However, there were no known procedures or processes in place to monitor the use of funds during the fiscal period. Therefore, it is possible buildings renovated with program funds may not be maintained as emergency shelters for the minimum required time period. We recommend agency management develop internal controls to ensure buildings renovated for use as emergency homeless shelters are maintained as shelters for the period required.
2022-021 Oregon Housing and Community Services Controls are needed to ensure compliance with level of effort requirements Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 24 CFR 576.101(c) When a subrecipient is a unit of general-purpose local government, its ESG-CV program funds may not be used to replace funds the local government provided for street outreach and emergency shelter services during the preceding 12-month period unless U.S. Dept. of Housing and Urban Development determines the local government is in a severe financial deficit. ESG-CV funds should be used to supplement, not replace those funds. We determined the department was not monitoring its subrecipients for compliance with level of effort requirements during our review. Documentation was not available for review, and we were unable to determine the department?s compliance with this requirement. As a result, local governments could be using program funds to replace their funding allocated to street outreach and emergency shelter services. We recommend department management develop procedures to ensure compliance with federal requirements for level of effort and maintain documentation.
2022-022 Oregon Housing and Community Services Documentation verifying subrecipients have not been suspended or debarred needs to be retained Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 180.300; 2 CFR 180.305 Federal regulations require the department verify subrecipients are not suspended or debarred from receiving federal funds prior to making any disbursements. We randomly selected a sample of 14 subrecipients to verify whether they were federally suspended or debarred and determine whether the department performed a verification prior to disbursing program funds. Department management stated subrecipients? suspension/debarment status was reviewed in the federal database but was unable to provide documentation demonstrating the review was performed. Without performing this verification, the department could unknowingly pass federal funds to a subrecipient that has been federally suspended or debarred. Our independent verification confirmed the 14 subrecipients selected for testing were not suspended or debarred. We recommend department management maintain documentation demonstrating subrecipients have not been suspended or debarred.
2022-023 Oregon Housing and Community Services Controls need to be strengthened to ensure the required expenditures are spent timely Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Special Tests and Provisions Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: CPD 21-08(III)(B)(2)(c) Emergency Solutions Grants-Cares Act (ESG-CV) funds were intended to be spent quickly on allowable activities to address the public health and economic crisis stemming from COVID-19. At least 20% of the total award was to be spent by September 30, 2021. Based on our testing, the department was not adequately tracking the percentage or timeliness of expenditures and did not reach the expenditure milestone. Approximately 18% of the total award was expended by September 30, 2021. If the 20% milestone is not achieved, HUD is able to recapture up to 20%, or $11.2 million, of the total award. We recommend agency management develop procedures to ensure grant expenditures are adequately tracked and spent within the required time period.
2022-024 Oregon Housing and Community Services Subrecipients need to be monitored to ensure compliance with procurement standards Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Procurement, and Suspension and Debarment Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.317 - .327; 2 CFR 200.332(d) Federal regulations state that non-federal entities, including subrecipients, are required to have and use procurement procedures consistent with state and local laws and regulations and that conform to the federal procurement standards identified in 2 CFR 200.317 - .327. Pass-through entities, like the department, are required to monitor subrecipients for compliance with federal regulations and the terms and conditions of the award. Inquiries and testing determined the department?s fiscal monitoring procedures, which normally include review of compliance with procurement standards, were not fully performed during the fiscal year and only 6 of 45 subrecipients were reviewed. As a result, subrecipients could be out of compliance with procurement requirements. We recommend the department ensure subrecipients are monitored for compliance with procurement requirements.
2022-060 Higher Education Coordinating Commission Strengthen controls to ensure expenditures are not obligated beyond the period of performance Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA32218F30, 2018; AA32218G10, 2018; AA32218G30, 2018; AA32218G70, 2018; AA32218H90, 2018; AA32218F31, 2018 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,523 (known) Criteria: 20 CFR 683.110; 2 CFR 200.343 (2018) WIOA grants are available for expenditure by the State during the grant program year and the two succeeding program years. In addition, the State must liquidate all financial obligations incurred no later than 90 calendar days after the end date of the period of performance. We judgmentally selected for review expenditures recorded in fiscal year 2022 related to 2018 grant award whose period of performance ended June 30, 2021. Our review of the supporting documentation found there were 3 out of 13 items with expenditures that were outside the period of performance. Total question cost for these expenditures were $47,523. Per management, these errors were due to a change in personnel and trying to balance out the 2018 grant after the fact. We recommend department management review and revise controls to ensure expenditures are only obligated during the period of performance federally mandated dates.
2022-061 Higher Education Coordinating Commission FFATA reports were not prepared or submitted Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Worker Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0; 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The WIOA Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). FFATA requires the department to submit information for any subaward action that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Upon inquiry of the department, we determined it had not submitted any subaward information to the FSRS during fiscal year 2022. Department management stated FFATA reporting was not completed due to staff turnover. We also reviewed information the department had submitted at USAspending.gov and determined the department had not submitted any subaward information to FSRS since 2017. The agency is not in compliance with FFATA reporting requirements. Additionally, the department is not transparent in the spending decisions of these federal awards. We recommend department management implement controls to timely prepare and submit the monthly FFATA reports as required by federal regulations. The department should also work with the federal awarding agency to determine what actions it should take for older reports not submitted.
2022-062 Higher Education Coordinating Commission Improve controls over payroll Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0, 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 Federal regulations require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department has implemented the following procedures to ensure payroll costs are correctly charged to the program. Managers approve monthly timesheets submitted by the employees in the state?s payroll system. When managers do not approve by a specified date, the payroll system will automatically approve the timesheet, shown with the words ?system approved.? Additionally, each employee should have a signed position description, which details the duties of the position and the amount of time to be charged for the duties. We selected a nonstatistical random sample of 20 employee timesheets related to 12 employees to ensure payroll was appropriately charged to the program. Additionally, we selected one employee who was on job rotation with the agency from January 2022 through June 2022. We verified payroll timesheets were reviewed by a manager and signed position descriptions were retained per state guidelines, and identified the following exceptions: ? Two timesheets for one employee did not have evidence of manager approval and 2 timesheets for two employees were reviewed over three months later. ? For all 12 employees, the position descriptions provided were unsigned or signed upon our request. We did not question these costs as department management verified job duties were appropriate to the program. ? For the employee on job rotation, 4 of the 6 timesheets were not reviewed and a signed position description was not signed by the employee. According to department management, timesheets were not always approved by the manager as the system will automatically lock and approve the timesheet. For position descriptions, supervisor did not always follow through on obtaining signed position descriptions and for longer term employees a number of boxes could not be located when the agency moved. There is a risk that employees could be improperly charging to the federal program. We recommend department management ensure timesheets are timely reviewed and positions descriptions are completed and retained.
2022-060 Higher Education Coordinating Commission Strengthen controls to ensure expenditures are not obligated beyond the period of performance Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA32218F30, 2018; AA32218G10, 2018; AA32218G30, 2018; AA32218G70, 2018; AA32218H90, 2018; AA32218F31, 2018 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,523 (known) Criteria: 20 CFR 683.110; 2 CFR 200.343 (2018) WIOA grants are available for expenditure by the State during the grant program year and the two succeeding program years. In addition, the State must liquidate all financial obligations incurred no later than 90 calendar days after the end date of the period of performance. We judgmentally selected for review expenditures recorded in fiscal year 2022 related to 2018 grant award whose period of performance ended June 30, 2021. Our review of the supporting documentation found there were 3 out of 13 items with expenditures that were outside the period of performance. Total question cost for these expenditures were $47,523. Per management, these errors were due to a change in personnel and trying to balance out the 2018 grant after the fact. We recommend department management review and revise controls to ensure expenditures are only obligated during the period of performance federally mandated dates.
2022-061 Higher Education Coordinating Commission FFATA reports were not prepared or submitted Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Worker Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0; 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The WIOA Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). FFATA requires the department to submit information for any subaward action that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Upon inquiry of the department, we determined it had not submitted any subaward information to the FSRS during fiscal year 2022. Department management stated FFATA reporting was not completed due to staff turnover. We also reviewed information the department had submitted at USAspending.gov and determined the department had not submitted any subaward information to FSRS since 2017. The agency is not in compliance with FFATA reporting requirements. Additionally, the department is not transparent in the spending decisions of these federal awards. We recommend department management implement controls to timely prepare and submit the monthly FFATA reports as required by federal regulations. The department should also work with the federal awarding agency to determine what actions it should take for older reports not submitted.
2022-062 Higher Education Coordinating Commission Improve controls over payroll Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0, 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 Federal regulations require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department has implemented the following procedures to ensure payroll costs are correctly charged to the program. Managers approve monthly timesheets submitted by the employees in the state?s payroll system. When managers do not approve by a specified date, the payroll system will automatically approve the timesheet, shown with the words ?system approved.? Additionally, each employee should have a signed position description, which details the duties of the position and the amount of time to be charged for the duties. We selected a nonstatistical random sample of 20 employee timesheets related to 12 employees to ensure payroll was appropriately charged to the program. Additionally, we selected one employee who was on job rotation with the agency from January 2022 through June 2022. We verified payroll timesheets were reviewed by a manager and signed position descriptions were retained per state guidelines, and identified the following exceptions: ? Two timesheets for one employee did not have evidence of manager approval and 2 timesheets for two employees were reviewed over three months later. ? For all 12 employees, the position descriptions provided were unsigned or signed upon our request. We did not question these costs as department management verified job duties were appropriate to the program. ? For the employee on job rotation, 4 of the 6 timesheets were not reviewed and a signed position description was not signed by the employee. According to department management, timesheets were not always approved by the manager as the system will automatically lock and approve the timesheet. For position descriptions, supervisor did not always follow through on obtaining signed position descriptions and for longer term employees a number of boxes could not be located when the agency moved. There is a risk that employees could be improperly charging to the federal program. We recommend department management ensure timesheets are timely reviewed and positions descriptions are completed and retained.
2022-060 Higher Education Coordinating Commission Strengthen controls to ensure expenditures are not obligated beyond the period of performance Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA32218F30, 2018; AA32218G10, 2018; AA32218G30, 2018; AA32218G70, 2018; AA32218H90, 2018; AA32218F31, 2018 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,523 (known) Criteria: 20 CFR 683.110; 2 CFR 200.343 (2018) WIOA grants are available for expenditure by the State during the grant program year and the two succeeding program years. In addition, the State must liquidate all financial obligations incurred no later than 90 calendar days after the end date of the period of performance. We judgmentally selected for review expenditures recorded in fiscal year 2022 related to 2018 grant award whose period of performance ended June 30, 2021. Our review of the supporting documentation found there were 3 out of 13 items with expenditures that were outside the period of performance. Total question cost for these expenditures were $47,523. Per management, these errors were due to a change in personnel and trying to balance out the 2018 grant after the fact. We recommend department management review and revise controls to ensure expenditures are only obligated during the period of performance federally mandated dates.
2022-061 Higher Education Coordinating Commission FFATA reports were not prepared or submitted Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Worker Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0; 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The WIOA Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). FFATA requires the department to submit information for any subaward action that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Upon inquiry of the department, we determined it had not submitted any subaward information to the FSRS during fiscal year 2022. Department management stated FFATA reporting was not completed due to staff turnover. We also reviewed information the department had submitted at USAspending.gov and determined the department had not submitted any subaward information to FSRS since 2017. The agency is not in compliance with FFATA reporting requirements. Additionally, the department is not transparent in the spending decisions of these federal awards. We recommend department management implement controls to timely prepare and submit the monthly FFATA reports as required by federal regulations. The department should also work with the federal awarding agency to determine what actions it should take for older reports not submitted.
2022-062 Higher Education Coordinating Commission Improve controls over payroll Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0, 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 Federal regulations require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department has implemented the following procedures to ensure payroll costs are correctly charged to the program. Managers approve monthly timesheets submitted by the employees in the state?s payroll system. When managers do not approve by a specified date, the payroll system will automatically approve the timesheet, shown with the words ?system approved.? Additionally, each employee should have a signed position description, which details the duties of the position and the amount of time to be charged for the duties. We selected a nonstatistical random sample of 20 employee timesheets related to 12 employees to ensure payroll was appropriately charged to the program. Additionally, we selected one employee who was on job rotation with the agency from January 2022 through June 2022. We verified payroll timesheets were reviewed by a manager and signed position descriptions were retained per state guidelines, and identified the following exceptions: ? Two timesheets for one employee did not have evidence of manager approval and 2 timesheets for two employees were reviewed over three months later. ? For all 12 employees, the position descriptions provided were unsigned or signed upon our request. We did not question these costs as department management verified job duties were appropriate to the program. ? For the employee on job rotation, 4 of the 6 timesheets were not reviewed and a signed position description was not signed by the employee. According to department management, timesheets were not always approved by the manager as the system will automatically lock and approve the timesheet. For position descriptions, supervisor did not always follow through on obtaining signed position descriptions and for longer term employees a number of boxes could not be located when the agency moved. There is a risk that employees could be improperly charging to the federal program. We recommend department management ensure timesheets are timely reviewed and positions descriptions are completed and retained.
2022-060 Higher Education Coordinating Commission Strengthen controls to ensure expenditures are not obligated beyond the period of performance Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA32218F30, 2018; AA32218G10, 2018; AA32218G30, 2018; AA32218G70, 2018; AA32218H90, 2018; AA32218F31, 2018 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,523 (known) Criteria: 20 CFR 683.110; 2 CFR 200.343 (2018) WIOA grants are available for expenditure by the State during the grant program year and the two succeeding program years. In addition, the State must liquidate all financial obligations incurred no later than 90 calendar days after the end date of the period of performance. We judgmentally selected for review expenditures recorded in fiscal year 2022 related to 2018 grant award whose period of performance ended June 30, 2021. Our review of the supporting documentation found there were 3 out of 13 items with expenditures that were outside the period of performance. Total question cost for these expenditures were $47,523. Per management, these errors were due to a change in personnel and trying to balance out the 2018 grant after the fact. We recommend department management review and revise controls to ensure expenditures are only obligated during the period of performance federally mandated dates.
2022-061 Higher Education Coordinating Commission FFATA reports were not prepared or submitted Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Worker Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0; 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The WIOA Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). FFATA requires the department to submit information for any subaward action that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Upon inquiry of the department, we determined it had not submitted any subaward information to the FSRS during fiscal year 2022. Department management stated FFATA reporting was not completed due to staff turnover. We also reviewed information the department had submitted at USAspending.gov and determined the department had not submitted any subaward information to FSRS since 2017. The agency is not in compliance with FFATA reporting requirements. Additionally, the department is not transparent in the spending decisions of these federal awards. We recommend department management implement controls to timely prepare and submit the monthly FFATA reports as required by federal regulations. The department should also work with the federal awarding agency to determine what actions it should take for older reports not submitted.
2022-062 Higher Education Coordinating Commission Improve controls over payroll Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0, 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 Federal regulations require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department has implemented the following procedures to ensure payroll costs are correctly charged to the program. Managers approve monthly timesheets submitted by the employees in the state?s payroll system. When managers do not approve by a specified date, the payroll system will automatically approve the timesheet, shown with the words ?system approved.? Additionally, each employee should have a signed position description, which details the duties of the position and the amount of time to be charged for the duties. We selected a nonstatistical random sample of 20 employee timesheets related to 12 employees to ensure payroll was appropriately charged to the program. Additionally, we selected one employee who was on job rotation with the agency from January 2022 through June 2022. We verified payroll timesheets were reviewed by a manager and signed position descriptions were retained per state guidelines, and identified the following exceptions: ? Two timesheets for one employee did not have evidence of manager approval and 2 timesheets for two employees were reviewed over three months later. ? For all 12 employees, the position descriptions provided were unsigned or signed upon our request. We did not question these costs as department management verified job duties were appropriate to the program. ? For the employee on job rotation, 4 of the 6 timesheets were not reviewed and a signed position description was not signed by the employee. According to department management, timesheets were not always approved by the manager as the system will automatically lock and approve the timesheet. For position descriptions, supervisor did not always follow through on obtaining signed position descriptions and for longer term employees a number of boxes could not be located when the agency moved. There is a risk that employees could be improperly charging to the federal program. We recommend department management ensure timesheets are timely reviewed and positions descriptions are completed and retained.
2022-060 Higher Education Coordinating Commission Strengthen controls to ensure expenditures are not obligated beyond the period of performance Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA32218F30, 2018; AA32218G10, 2018; AA32218G30, 2018; AA32218G70, 2018; AA32218H90, 2018; AA32218F31, 2018 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,523 (known) Criteria: 20 CFR 683.110; 2 CFR 200.343 (2018) WIOA grants are available for expenditure by the State during the grant program year and the two succeeding program years. In addition, the State must liquidate all financial obligations incurred no later than 90 calendar days after the end date of the period of performance. We judgmentally selected for review expenditures recorded in fiscal year 2022 related to 2018 grant award whose period of performance ended June 30, 2021. Our review of the supporting documentation found there were 3 out of 13 items with expenditures that were outside the period of performance. Total question cost for these expenditures were $47,523. Per management, these errors were due to a change in personnel and trying to balance out the 2018 grant after the fact. We recommend department management review and revise controls to ensure expenditures are only obligated during the period of performance federally mandated dates.
2022-061 Higher Education Coordinating Commission FFATA reports were not prepared or submitted Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Worker Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0; 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The WIOA Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). FFATA requires the department to submit information for any subaward action that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Upon inquiry of the department, we determined it had not submitted any subaward information to the FSRS during fiscal year 2022. Department management stated FFATA reporting was not completed due to staff turnover. We also reviewed information the department had submitted at USAspending.gov and determined the department had not submitted any subaward information to FSRS since 2017. The agency is not in compliance with FFATA reporting requirements. Additionally, the department is not transparent in the spending decisions of these federal awards. We recommend department management implement controls to timely prepare and submit the monthly FFATA reports as required by federal regulations. The department should also work with the federal awarding agency to determine what actions it should take for older reports not submitted.
2022-062 Higher Education Coordinating Commission Improve controls over payroll Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0, 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 Federal regulations require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department has implemented the following procedures to ensure payroll costs are correctly charged to the program. Managers approve monthly timesheets submitted by the employees in the state?s payroll system. When managers do not approve by a specified date, the payroll system will automatically approve the timesheet, shown with the words ?system approved.? Additionally, each employee should have a signed position description, which details the duties of the position and the amount of time to be charged for the duties. We selected a nonstatistical random sample of 20 employee timesheets related to 12 employees to ensure payroll was appropriately charged to the program. Additionally, we selected one employee who was on job rotation with the agency from January 2022 through June 2022. We verified payroll timesheets were reviewed by a manager and signed position descriptions were retained per state guidelines, and identified the following exceptions: ? Two timesheets for one employee did not have evidence of manager approval and 2 timesheets for two employees were reviewed over three months later. ? For all 12 employees, the position descriptions provided were unsigned or signed upon our request. We did not question these costs as department management verified job duties were appropriate to the program. ? For the employee on job rotation, 4 of the 6 timesheets were not reviewed and a signed position description was not signed by the employee. According to department management, timesheets were not always approved by the manager as the system will automatically lock and approve the timesheet. For position descriptions, supervisor did not always follow through on obtaining signed position descriptions and for longer term employees a number of boxes could not be located when the agency moved. There is a risk that employees could be improperly charging to the federal program. We recommend department management ensure timesheets are timely reviewed and positions descriptions are completed and retained.
2022-063 Oregon Department of Transportation Consistency needed when providing required federal award information to subrecipients Federal Awarding Agency: U.S. Department of Transportation Assistance Listing Number and Name: 20.205 Highway Planning and Construction Federal Award Numbers and Years: Various Compliance Requirements: Subrecipient Monitoring Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332(a)(1) Federal regulations require pass-through entities to ensure every subaward is clearly identified to the subrecipient as a subaward and includes certain required information. We examined 17 subrecipient awards to ensure the information required under 2 CFR 200.332(a)(1) was communicated at the time of the subaward. Each award examined was missing one or more of the required elements: ? 15 samples did not include the subrecipient?s Unique Entity Identifier or DUNS number; ? 7 samples did not provide the Federal Award Identification Number (FAIN); ? 5 samples did not provide the Federal Award date; and ? 1 sample did not provide the correct assistance listing number. The required award information is necessary for the subrecipient to accurately report the subaward information in its accounting records and on the schedule of expenditure of federal awards. Procedures to communicate award information are not consistently followed across the department and as a result do not ensure that all the required award information is communicated. Specifically, some required information is included in the Federal Project Agreement from the Federal Management Information System (FMIS), but not all managers were aware it needed to be provided. In many cases an exhibit was included with the agreement that could have provided all the required information, but the exhibit was not completed. We recommend the department adopt procedures for preparing subaward agreements that ensure all required information is provided to subrecipients at the time of the subaward.
2022-064 Oregon Department of Transportation Management should ensure timely review of transfers is documented Federal Awarding Agency: U.S. Department of Transportation Assistance Listing Number and Name: 20.205 Highway Planning and Construction Federal Award Numbers and Years: Various Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303; GAO-17-704G ?10.03, 12.05; ODOT FASM 3.7 The department is responsible for establishing and maintaining internal controls to ensure entries posted in the accounting records are for costs and activities allowable under the federal program. Journal entry review and approval should be clearly documented and readily available for examination. The department has established Financial Administration Standard 3.7, Expenditure Journal Entries, which requires management to transmit signed hard copy supporting documentation of journal entries to financial services after they?ve been reviewed and approved. We tested 40 transfer journal entries moving costs between federal project sub jobs and found that 19 did not have documentation of timely approval. In two cases, approval was documented more than a year after costs were transferred. The 19 entries were all lump sum transfers processed by Program and Funding Services (P&FS). P&FS is authorized to process transfers, moving costs between sub jobs of the same project. These transfers are necessary to align project costs with the appropriate funding source. Per P&FS management, transfers are generally reviewed within a few days. However, documentation of the review has not been occurring until much later due to challenges associated with remote work and policies requiring hard copy documentation. Over $90 million in program costs were transferred between sub jobs in this manner during fiscal year 2022. Without timely review and documentation available to support transfers, unallowable costs or activities could be transferred and billed erroneously to the Federal government. We recommend management ensure procedures for review of transfer journal entries result in timely documented approvals.
2022-063 Oregon Department of Transportation Consistency needed when providing required federal award information to subrecipients Federal Awarding Agency: U.S. Department of Transportation Assistance Listing Number and Name: 20.205 Highway Planning and Construction Federal Award Numbers and Years: Various Compliance Requirements: Subrecipient Monitoring Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332(a)(1) Federal regulations require pass-through entities to ensure every subaward is clearly identified to the subrecipient as a subaward and includes certain required information. We examined 17 subrecipient awards to ensure the information required under 2 CFR 200.332(a)(1) was communicated at the time of the subaward. Each award examined was missing one or more of the required elements: ? 15 samples did not include the subrecipient?s Unique Entity Identifier or DUNS number; ? 7 samples did not provide the Federal Award Identification Number (FAIN); ? 5 samples did not provide the Federal Award date; and ? 1 sample did not provide the correct assistance listing number. The required award information is necessary for the subrecipient to accurately report the subaward information in its accounting records and on the schedule of expenditure of federal awards. Procedures to communicate award information are not consistently followed across the department and as a result do not ensure that all the required award information is communicated. Specifically, some required information is included in the Federal Project Agreement from the Federal Management Information System (FMIS), but not all managers were aware it needed to be provided. In many cases an exhibit was included with the agreement that could have provided all the required information, but the exhibit was not completed. We recommend the department adopt procedures for preparing subaward agreements that ensure all required information is provided to subrecipients at the time of the subaward.
2022-064 Oregon Department of Transportation Management should ensure timely review of transfers is documented Federal Awarding Agency: U.S. Department of Transportation Assistance Listing Number and Name: 20.205 Highway Planning and Construction Federal Award Numbers and Years: Various Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303; GAO-17-704G ?10.03, 12.05; ODOT FASM 3.7 The department is responsible for establishing and maintaining internal controls to ensure entries posted in the accounting records are for costs and activities allowable under the federal program. Journal entry review and approval should be clearly documented and readily available for examination. The department has established Financial Administration Standard 3.7, Expenditure Journal Entries, which requires management to transmit signed hard copy supporting documentation of journal entries to financial services after they?ve been reviewed and approved. We tested 40 transfer journal entries moving costs between federal project sub jobs and found that 19 did not have documentation of timely approval. In two cases, approval was documented more than a year after costs were transferred. The 19 entries were all lump sum transfers processed by Program and Funding Services (P&FS). P&FS is authorized to process transfers, moving costs between sub jobs of the same project. These transfers are necessary to align project costs with the appropriate funding source. Per P&FS management, transfers are generally reviewed within a few days. However, documentation of the review has not been occurring until much later due to challenges associated with remote work and policies requiring hard copy documentation. Over $90 million in program costs were transferred between sub jobs in this manner during fiscal year 2022. Without timely review and documentation available to support transfers, unallowable costs or activities could be transferred and billed erroneously to the Federal government. We recommend management ensure procedures for review of transfer journal entries result in timely documented approvals.
2022-025 Oregon Housing and Community Services Perform fiscal monitoring for subrecipients administrative expenditures to ensure compliance Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: $121,463 (known) (COVID-19) Criteria: 2 CFR 200.332(a)(5) and (d) Department management is responsible for monitoring the activities of subrecipients to ensure subawards are used for authorized purposes and in compliance with federal requirements. Additionally, department management is responsible for communicating to subrecipients that they are required to permit the department and auditors access to their records as necessary to ensure the department is in compliance with program requirements. The department passed through program funds to community action agencies (subrecipients) to provide program delivery, including administrative costs. The department performed fiscal monitoring for only five of their 18 subrecipients during the audit period due to staff turnover. Fiscal monitoring includes procedures to address compliance with activities allowed and allowable cost requirements for administrative costs. Due to the limited fiscal monitoring performed, auditors performed additional procedures at the subrecipient level to determine whether the department was compliant with program requirements. We tested a total of 82 transactions, 70 randomly selected and 12 judgmentally selected from the 13 subrecipients that did not receive subrecipient monitoring during the fiscal year. We noted the following: ? One subrecipient did not respond to audit requests for documentation, resulting in an inability to test four transactions totaling $4,114. ? One subrecipient did not provide sufficiently detailed documentation to determine whether 7 transactions were for accurate amounts totaling $117,349. Of those seven transactions, we were unable to determine whether two transactions were for allowable activities or appropriately categorized as administrative expenditures. Without adequate monitoring of subrecipients, the department?s ability to ensure compliance with program requirements is diminished. We recommend department management perform fiscal monitoring to ensure subrecipients are expending administrative funds in accordance with program requirements.
2022-026 Oregon Housing and Community Services Department Implement program monitoring over client assistance payments to ensure compliance Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021; ERA 2, 2021 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed; Eligibility Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: $21,624 (known); $11,067,350 (likely) (COVID-19) Criteria: 2 CFR 200.332(d); 2 CFR 200.501(g) Department management is responsible for monitoring the activities of subrecipients to ensure subawards are used for authorized purposes and are compliant with federal requirements. Additionally, department management is responsible for ensuring compliance when a contractor is responsible for program compliance or the contractor?s records must be reviewed to determine program compliance. The department provided $140 million and $46 million of phase one program funds to community action agencies (subrecipients) and a third-party vendor (contractor) to provide program delivery, respectively; and $132 million phase two program funds to only the contractor. Program delivery included determining client eligibility and making payments for direct client assistance for rent, utilities, internet, and other housing related costs. During implementation of the program, the department provided program manuals to the subrecipients and contractor. Due to the department?s limited staff, they focused on updating policies and procedures to address systemic issues identified; however, if a particularly challenging application required the department?s review, they were available to provide direct assistance. The department did not implement any predefined, systemic program monitoring of the subrecipients or contractor to ensure direct client assistance payments were paid to only eligible clients for only allowable and supported amounts. Therefore, auditors performed additional procedures at the subrecipient and contractor level to determine whether direct client assistance payments were paid to eligible clients for allowable activities. We tested a total of 62 randomly selected direct client assistance payments at 16 subrecipients totaling $183,515, and found the following: ? One subrecipient did not respond to audit requests for documentation, resulting in an inability to test one transaction in the amount of $360. ? One subrecipient did not obtain documentation to support that there was a lease agreement in place, resulting in questioned costs of $5,775. When extrapolated to the total population, these errors result in over $2.3 million in likely questioned costs. We tested 61 randomly selected contractor direct client assistance payments totaling $374,274, and found the following: ? One payment where an incorrect landlord was paid in the amount of $2,700. Attempts to recover the funds have been unsuccessful as of the date of the finding. ? Two payments where the rental amount was doubled, resulting in overpayments totaling $5,910. ? Seven payments where amounts already paid were not accurately reflected in the calculation of assistance provided, resulting in overpayments totaling $4,191. ? Three payments where amounts did not agree to supporting documentation, resulting in overpayments of $2,181. ? Three payments where there was insufficient documentation for amounts paid, resulting in overpayments of $432. ? One payment where costs were paid for the same household on alternate applications, resulting in an overpayment of $73. When extrapolated to the total population, these errors result in over $8.7 million in likely questioned costs. We recommend department management implement predefined, systemic program monitoring to ensure the subrecipients and contractor are administering program funds in accordance with program requirements.
2022-027 Oregon Housing and Community Services Ensure Monthly and Quarterly reports are accurate and adequately supported Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021 (COVID-19); ERA 2, 2021 (COVID-19) Compliance Requirement: Reporting Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.302(a) and (b)(3); 2 CFR 200.303(a), (c)-(d) Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance the department is managing, evaluating, and monitoring the federal award in compliance with the terms and conditions of the award and taking prompt action when instances of noncompliance are identified. Additionally, the department is responsible for maintaining records to allow for submission of reports that are accurate and adequately supported. We tested four randomly selected monthly reports and found one report did not accurately report the number of unique households assisted and the amount of the assistance based on the supporting documentation. The department stated the differences were likely due to a transition in subsystem reporting formats and delays in report processing. We tested four quarterly reports, two of which were randomly selected and two of which were judgmentally selected. We found one report where the cumulative obligation amount did not agree to supporting documentation and were not accurate, and one report where the cumulative obligation and cumulative expenditures amounts did not agree to supporting documentation and were not accurate. The department stated these errors were due to erroneously entered information in the federal awarding agency?s reporting portal. Information included in these reports is used by the federal awarding agency to determine whether the department qualifies for receiving reallocation payments, as well as how much of a reallocation would be awarded to the department. Errors in these reports could result in errors in the federal awarding agency?s determination of eligibility for funding, and/or the reallocation formula. We recommend department management update and correct erroneous reports and establish controls to ensure reported amounts are accurate and adequately supported.
2022-028 Oregon Housing and Community Services Ensure Federal Funding Accountability and Transparency Act reporting is completed Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021 (COVID-19); ERA 2, 2021 (COVID-19) Compliance Requirement: Reporting Type of Finding: Material Weakness, Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303(a), (c)-(d); 2 CFR 170, Appendix A I(a) Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance the department is managing, evaluating, and monitoring the federal award in compliance with the terms and conditions of the award and taking prompt action when instances of noncompliance are identified. The Federal Funding Accountability and Transparency Act (FFATA) requires the department to submit information for any subaward action that equals or exceeds $30,000. Program guidance required the department to report detailed subaward information directly to the federal awarding agency. This detailed subaward information encompassed all requirements related to FFATA, and the federal awarding agency gave the department the option of filing required FFATA reports on their behalf. The department stated they did not provide the detailed subaward information to the federal awarding agency to complete FFATA reporting on their behalf, and they did not complete any alternate FFATA submissions during the fiscal year due to grant award information not being available on the federal website to file their reports. As a result, the department is not in compliance with FFATA reporting requirements. We recommend department management ensure FFATA reporting is completed.
2022-029 Oregon Housing and Community Services Ensure accessible documentation to evidence compliance with program requirements Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility Type of Finding: Material Weakness Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.302(a); 2 CFR 200.332(a)(5) Department management is responsible for communicating to subrecipients that they are required to permit the department and auditors access to their records as necessary to ensure the department is compliant with program requirements. To ensure compliance with program requirements, subrecipient records must also be sufficiently detailed. The department passed through $140 million phase one program funds to community action agencies (subrecipients) to provide program delivery. The department performed limited fiscal monitoring during the audit period which included procedures to address compliance with activities allowed and allowable cost requirements for administrative costs. The department did not perform any program monitoring during the audit period which primarily addresses compliance with eligibility requirements. To determine whether the department complied with program requirements for the fiscal year, auditors attempted to reconcile detailed subrecipient ledgers with the intent of selecting and testing sample items at each individual subrecipient organization. We noted issues with two individual subrecipients, resulting in an inability to perform testing procedures over a total of $21,438,521 in program expenditures. For the first subrecipient we were able to reconcile their detailed ledgers to the department?s financial records, however their detailed ledger included pass-through payments to a third organization for program delivery. As a result of the combination of direct and pass-through payments, we were unable to obtain sufficiently detailed data that also reconciled to the department?s financial records to select individual transactions for testing. This subrecipient represents $19,877,962 of the unaudited expenditures. For the second subrecipient we were able to reconcile their detailed ledgers to the department?s financial records and select administrative and program transactions for testing. However, the subrecipient was unresponsive to documentation requests to substantiate expenditures. This subrecipient accounted for $1,560,559 of the unaudited expenditures. We recommend department management obtain and reconcile sufficiently detailed subrecipient ledgers and support to substantiate expenditures to allow for fiscal and program monitoring to ensure subrecipients are administering program funds in accordance with program requirements.
2022-030 Oregon Housing and Community Services Ensure controls over administrative expenditure limits are properly designed and sufficiently detailed to ensure compliance Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021 (COVID-19); ERA 2, 2021 (COVID-19) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Material Weakness Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303(a), (c)-(d); 15 U.S.C. 9058a(c)(5)(A); 15 U.S.C. 9058c(d)(1)(C) Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance the department is managing, evaluating, and monitoring the federal award in compliance with the terms and conditions of the award and taking prompt action when instances of noncompliance are identified. Federal regulations limit the amount of federal funds that can be used for administrative expenditures. The department periodically prepared tracking spreadsheets during the fiscal year to monitor spending and ensure administrative expenditure limitations were not exceeded. We reviewed four randomly selected tracking spreadsheets and noted two tracking spreadsheets where there was insufficient detail to determine what category expenditures were associated with (administrative versus programmatic); and three tracking spreadsheets where there was no indication that the expenditures were within administrative expenditures limitations due to the periodic nature of the tracking. Without sufficiently designed and implemented controls, the department is at risk for exceeding their allowable administrative cost limits. We recommend department management ensure tracking spreadsheets are properly designed and sufficiently detailed to ensure compliance with administrative expenditures limitations.
2022-031 Oregon Housing and Community Services Comply with subrecipient monitoring requirements Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.027 Coronavirus State and Local Fiscal Recovery Fund (COVID-19) Federal Award Numbers and Years: OMB Approved No. 1505-0271, 2022 (COVID-19) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness, Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 45 CFR 75.351; 45 CFR 75.352(b); 45 CFR 75.352(d) When recipients of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) provide award funds to an entity to carry out objectives of program on behalf of the CSLFRF recipient, the entities receiving such funding are subrecipients. The recipient has the responsibility to monitor expenditures and activities subrecipients. Nearly all the department?s CSLFRF expenditures are comprised of payments to a private organization. Per the contract, the organization was hired to conduct eligibility assessments for the Emergency Rental Assistance program and be responsible to ensure only eligible applicants receive rental and utility assistance payments. CLSFRF funds were used for emergency rental assistance; therefore, the organization is carrying out a program on behalf of the department. The department then has the responsibility to monitor the expenditures and activities of the organization. The department incorrectly identified the organization as a vendor rather than a subrecipient during the contracting process. Per the guidance above, this was not an appropriate determination because the organization carries out eligibility determinations of the program. Management acknowledged no monitoring of the organization was performed during the audit period; therefore, there are no related key controls for the fiscal year ended June 30, 2022. Although program staff maintain a close working relationship with the organization, these interactions are not formalized and documented for the purpose of subrecipient monitoring. If subrecipient monitoring is not performed and documented, subawards could be used for unauthorized purposes and performance goals not met. We recommend department management reassess the department?s contracting process to appropriately identify whether an organization is a vendor or a subrecipient. If a subrecipient, we recommend the department comply with subrecipient monitoring requirements, including developing related internal controls and processes to monitor the expenditures and activities of the organization.
2022-065 Oregon Department of Education State did not meet maintenance of effort requirement Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425R, 84.425U & 84.425W, Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425R210047; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: Section 18008 of Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; Section 2004(a) of the American Rescue Plan (ARP) Act; 2 CFR 200.303 The CRRSA and the ARP acts require the State to maintain support for both elementary and secondary education and for higher education in fiscal year 2022 at least at the proportional level of the state?s support for elementary and secondary education and for higher education relative to the state?s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Department of Education did not meet the maintenance of effort provisions for fiscal year 2022 for elementary and secondary education. Although the state?s overall funding increased for education its proportional level relative to Oregon?s overall spending declined. The department is reliant on the legislative budget process. The department was in contact with the federal awarding agency about the maintenance of effort issue. The department submitted a waiver request to the U.S. Department of Education dated March 29, 2023. According to department management, budget changes and obtaining a clearer understanding of the other fund amount delayed the calculation for maintenance of effort. If the waiver is not approved, the department may be asked to return some of the funds. The total federal expenditures for the Education Stabilization Fund program for the fiscal year ended June 30, 2022 were $426 million. We recommend department management continue to actively track whether it will meet the maintenance of effort requirement and work with the federal awarding agency.
2022-066 Oregon Department of Education Improve subrecipient monitoring procedures Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425U & 84.425W Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C200048; 2020 (COVID-19), S425D200049; 2020 (COVID-19), S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332 Federal regulations require the department to evaluate each subrecipients risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate monitoring to perform. In addition, the department should monitor the activities of the subrecipients receiving funds to ensure the subaward is used for authorized purposes, is in compliance with Federal statutes, regulations, and the terms and condition of the subaward; and the subaward performance goals are achieved. Depending on the department risk assessment, which was not performed, the department could perform various monitoring tools to ensure accountability and compliance. As of June 30, 2022, the department was still in the process of drafting and implementing a plan to monitor the funds. The department had not completed a risk assessment process of the local educational agencies (LEA) for these funds and stated it planned to begin some desk or on-site monitoring in Spring 2023. $522 million in funds have been passed through to subrecipients as of June 30, 2022. The department required LEA?s to submit applications to receive funds and sign agreements that outlined all federal requirements. In addition, the department also required the LEA?s to complete a reimbursement request form that contains general ledger detail but no additional support is provided. According to the department, it follows-up with a LEA if funds appear to be ineligible or other questions are raised. Finally, although LEAs programs may have had a single audit the department could not provide a list of which LEAs had audits and whether there were findings or not. In fiscal year 2021, the department was also working to finalize its risk assessment and monitoring plans. However, the department experienced staff turnover which delayed its plans. Insufficient subrecipient monitoring increases the risk of not timely identifying subrecipients that are not administering federal awards in compliance with federal requirements. We recommend department management complete its risk assessment, consider the results of LEAs single audits and perform desk or on-site monitoring as necessary.
2022-067 Oregon Department of Education Ensure accuracy of federal reporting Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C200048; 2020 (COVID-19) Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.302(b); 2 CFR 200.303(a) Federal regulations require that federal reports include all activity of the reporting period and be supported by applicable accounting records. Federal regulations also require that the department file a separate report for the Governor?s Emergency Education Relief (GEER) expenditures for the period ending June 30, 2021. The department reported GEER information for the local education areas (LEAs) related to the comprehensive distance learning grant program. LEAs submit reimbursement to the department and this information is tracked in an excel database. The database includes various information, including funding types, dates, and amounts. During FY 2022, the department completed the reports using the database, but incorrectly filtered the data so some expenditures were not captured. This resulted in an underreporting of GEER expenditures by $13.9 million. We recommend department management ensure that accurate expenditure data is submitted to the federal government for federal reporting.
2022-065 Oregon Department of Education State did not meet maintenance of effort requirement Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425R, 84.425U & 84.425W, Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425R210047; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: Section 18008 of Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; Section 2004(a) of the American Rescue Plan (ARP) Act; 2 CFR 200.303 The CRRSA and the ARP acts require the State to maintain support for both elementary and secondary education and for higher education in fiscal year 2022 at least at the proportional level of the state?s support for elementary and secondary education and for higher education relative to the state?s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Department of Education did not meet the maintenance of effort provisions for fiscal year 2022 for elementary and secondary education. Although the state?s overall funding increased for education its proportional level relative to Oregon?s overall spending declined. The department is reliant on the legislative budget process. The department was in contact with the federal awarding agency about the maintenance of effort issue. The department submitted a waiver request to the U.S. Department of Education dated March 29, 2023. According to department management, budget changes and obtaining a clearer understanding of the other fund amount delayed the calculation for maintenance of effort. If the waiver is not approved, the department may be asked to return some of the funds. The total federal expenditures for the Education Stabilization Fund program for the fiscal year ended June 30, 2022 were $426 million. We recommend department management continue to actively track whether it will meet the maintenance of effort requirement and work with the federal awarding agency.
2022-066 Oregon Department of Education Improve subrecipient monitoring procedures Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425U & 84.425W Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C200048; 2020 (COVID-19), S425D200049; 2020 (COVID-19), S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332 Federal regulations require the department to evaluate each subrecipients risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate monitoring to perform. In addition, the department should monitor the activities of the subrecipients receiving funds to ensure the subaward is used for authorized purposes, is in compliance with Federal statutes, regulations, and the terms and condition of the subaward; and the subaward performance goals are achieved. Depending on the department risk assessment, which was not performed, the department could perform various monitoring tools to ensure accountability and compliance. As of June 30, 2022, the department was still in the process of drafting and implementing a plan to monitor the funds. The department had not completed a risk assessment process of the local educational agencies (LEA) for these funds and stated it planned to begin some desk or on-site monitoring in Spring 2023. $522 million in funds have been passed through to subrecipients as of June 30, 2022. The department required LEA?s to submit applications to receive funds and sign agreements that outlined all federal requirements. In addition, the department also required the LEA?s to complete a reimbursement request form that contains general ledger detail but no additional support is provided. According to the department, it follows-up with a LEA if funds appear to be ineligible or other questions are raised. Finally, although LEAs programs may have had a single audit the department could not provide a list of which LEAs had audits and whether there were findings or not. In fiscal year 2021, the department was also working to finalize its risk assessment and monitoring plans. However, the department experienced staff turnover which delayed its plans. Insufficient subrecipient monitoring increases the risk of not timely identifying subrecipients that are not administering federal awards in compliance with federal requirements. We recommend department management complete its risk assessment, consider the results of LEAs single audits and perform desk or on-site monitoring as necessary.
2022-065 Oregon Department of Education State did not meet maintenance of effort requirement Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425R, 84.425U & 84.425W, Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425R210047; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: Section 18008 of Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; Section 2004(a) of the American Rescue Plan (ARP) Act; 2 CFR 200.303 The CRRSA and the ARP acts require the State to maintain support for both elementary and secondary education and for higher education in fiscal year 2022 at least at the proportional level of the state?s support for elementary and secondary education and for higher education relative to the state?s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Department of Education did not meet the maintenance of effort provisions for fiscal year 2022 for elementary and secondary education. Although the state?s overall funding increased for education its proportional level relative to Oregon?s overall spending declined. The department is reliant on the legislative budget process. The department was in contact with the federal awarding agency about the maintenance of effort issue. The department submitted a waiver request to the U.S. Department of Education dated March 29, 2023. According to department management, budget changes and obtaining a clearer understanding of the other fund amount delayed the calculation for maintenance of effort. If the waiver is not approved, the department may be asked to return some of the funds. The total federal expenditures for the Education Stabilization Fund program for the fiscal year ended June 30, 2022 were $426 million. We recommend department management continue to actively track whether it will meet the maintenance of effort requirement and work with the federal awarding agency.
2022-065 Oregon Department of Education State did not meet maintenance of effort requirement Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425R, 84.425U & 84.425W, Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425R210047; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: Section 18008 of Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; Section 2004(a) of the American Rescue Plan (ARP) Act; 2 CFR 200.303 The CRRSA and the ARP acts require the State to maintain support for both elementary and secondary education and for higher education in fiscal year 2022 at least at the proportional level of the state?s support for elementary and secondary education and for higher education relative to the state?s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Department of Education did not meet the maintenance of effort provisions for fiscal year 2022 for elementary and secondary education. Although the state?s overall funding increased for education its proportional level relative to Oregon?s overall spending declined. The department is reliant on the legislative budget process. The department was in contact with the federal awarding agency about the maintenance of effort issue. The department submitted a waiver request to the U.S. Department of Education dated March 29, 2023. According to department management, budget changes and obtaining a clearer understanding of the other fund amount delayed the calculation for maintenance of effort. If the waiver is not approved, the department may be asked to return some of the funds. The total federal expenditures for the Education Stabilization Fund program for the fiscal year ended June 30, 2022 were $426 million. We recommend department management continue to actively track whether it will meet the maintenance of effort requirement and work with the federal awarding agency.
2022-066 Oregon Department of Education Improve subrecipient monitoring procedures Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425U & 84.425W Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C200048; 2020 (COVID-19), S425D200049; 2020 (COVID-19), S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332 Federal regulations require the department to evaluate each subrecipients risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate monitoring to perform. In addition, the department should monitor the activities of the subrecipients receiving funds to ensure the subaward is used for authorized purposes, is in compliance with Federal statutes, regulations, and the terms and condition of the subaward; and the subaward performance goals are achieved. Depending on the department risk assessment, which was not performed, the department could perform various monitoring tools to ensure accountability and compliance. As of June 30, 2022, the department was still in the process of drafting and implementing a plan to monitor the funds. The department had not completed a risk assessment process of the local educational agencies (LEA) for these funds and stated it planned to begin some desk or on-site monitoring in Spring 2023. $522 million in funds have been passed through to subrecipients as of June 30, 2022. The department required LEA?s to submit applications to receive funds and sign agreements that outlined all federal requirements. In addition, the department also required the LEA?s to complete a reimbursement request form that contains general ledger detail but no additional support is provided. According to the department, it follows-up with a LEA if funds appear to be ineligible or other questions are raised. Finally, although LEAs programs may have had a single audit the department could not provide a list of which LEAs had audits and whether there were findings or not. In fiscal year 2021, the department was also working to finalize its risk assessment and monitoring plans. However, the department experienced staff turnover which delayed its plans. Insufficient subrecipient monitoring increases the risk of not timely identifying subrecipients that are not administering federal awards in compliance with federal requirements. We recommend department management complete its risk assessment, consider the results of LEAs single audits and perform desk or on-site monitoring as necessary.
2022-065 Oregon Department of Education State did not meet maintenance of effort requirement Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425R, 84.425U & 84.425W, Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425R210047; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: Section 18008 of Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; Section 2004(a) of the American Rescue Plan (ARP) Act; 2 CFR 200.303 The CRRSA and the ARP acts require the State to maintain support for both elementary and secondary education and for higher education in fiscal year 2022 at least at the proportional level of the state?s support for elementary and secondary education and for higher education relative to the state?s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Department of Education did not meet the maintenance of effort provisions for fiscal year 2022 for elementary and secondary education. Although the state?s overall funding increased for education its proportional level relative to Oregon?s overall spending declined. The department is reliant on the legislative budget process. The department was in contact with the federal awarding agency about the maintenance of effort issue. The department submitted a waiver request to the U.S. Department of Education dated March 29, 2023. According to department management, budget changes and obtaining a clearer understanding of the other fund amount delayed the calculation for maintenance of effort. If the waiver is not approved, the department may be asked to return some of the funds. The total federal expenditures for the Education Stabilization Fund program for the fiscal year ended June 30, 2022 were $426 million. We recommend department management continue to actively track whether it will meet the maintenance of effort requirement and work with the federal awarding agency.
2022-066 Oregon Department of Education Improve subrecipient monitoring procedures Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425U & 84.425W Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C200048; 2020 (COVID-19), S425D200049; 2020 (COVID-19), S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332 Federal regulations require the department to evaluate each subrecipients risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate monitoring to perform. In addition, the department should monitor the activities of the subrecipients receiving funds to ensure the subaward is used for authorized purposes, is in compliance with Federal statutes, regulations, and the terms and condition of the subaward; and the subaward performance goals are achieved. Depending on the department risk assessment, which was not performed, the department could perform various monitoring tools to ensure accountability and compliance. As of June 30, 2022, the department was still in the process of drafting and implementing a plan to monitor the funds. The department had not completed a risk assessment process of the local educational agencies (LEA) for these funds and stated it planned to begin some desk or on-site monitoring in Spring 2023. $522 million in funds have been passed through to subrecipients as of June 30, 2022. The department required LEA?s to submit applications to receive funds and sign agreements that outlined all federal requirements. In addition, the department also required the LEA?s to complete a reimbursement request form that contains general ledger detail but no additional support is provided. According to the department, it follows-up with a LEA if funds appear to be ineligible or other questions are raised. Finally, although LEAs programs may have had a single audit the department could not provide a list of which LEAs had audits and whether there were findings or not. In fiscal year 2021, the department was also working to finalize its risk assessment and monitoring plans. However, the department experienced staff turnover which delayed its plans. Insufficient subrecipient monitoring increases the risk of not timely identifying subrecipients that are not administering federal awards in compliance with federal requirements. We recommend department management complete its risk assessment, consider the results of LEAs single audits and perform desk or on-site monitoring as necessary.
2022-049 Oregon Health Authority Return overdraw of reclassified FEMA expenditures Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements (COVID-19); 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (COVID-19) Federal Award Numbers and Years: 93.268: 5 NH23IP922626 (COVID-19); 6 NH23IP922626 (COVID-19); 93.323: 6 NU50CK000541 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: 93.268: $36,783 (known) (COVID-19); 93.323: $73,333 (known) (COVID-19) Criteria: 2 CFR 200.403 During the COVID-19 pandemic, the Oregon Health Authority (department) spent money from Federal Emergency Management Agency (FEMA) awards to address needs in addressing the pandemic. Due to delays in receiving federal reimbursement for the expenditures, the department reclassified the expenditures to other programs where reimbursements would occur timelier. In our testing of Activities Allowed or Unallowed, we reviewed two individually significant items in the accounting system reclassifying 398 and 914 individual expenditures from the FEMA grants to the Immunization Cooperative Agreements program and Epidemiology and Laboratory Capacity program, respectively. Based upon the account coding of the original transactions, all of the reclassifications were allowable and consistent with program requirements. However, we found several transactions were reclassified twice, resulting in an excess of $36,783 charged to the Immunization program and $73,333 charged to the Epidemiology program. The reclassifications were completed in two batches and the managerial review of the reclassifying transactions failed to detect some transactions were included in both batches. We recommend department management correct the entries and reimburse excess cash drawn to the federal agency for unallowable costs. We also recommend department management revise the review procedures to verify that the same expenditure transactions are not duplicated in multiple batches.
2022-050 Oregon Health Authority Improve review of expenditure transactions Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements (COVID-19) Federal Award Numbers and Years: 5 NH23IP922626, 2022 (COVID-19); 6 NH23IP922626, 2022 (COVID-19) Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 During fiscal year 2022, payroll for the Oregon Health Authority was processed through the Oregon State Payroll Application (OSPA). As part of each monthly payroll cycle, managers are expected to review and approve employee?s reported hours to ensure expenditures are accurate and are billed to the correct program(s). Although state policy requires managers to review the timesheets, the automated controls in the system will process the payroll without a review, effectively making the managerial review optional. The OSPA was retired as of November 30, 2022. However, the new Workday application that went into effect to replace the OSPA has the same weakness where payroll will process without regard for the managerial review. As part of our testing of program expenditures, we found that 3 of 134 timesheets were not reviewed by a manager prior to release into the payroll system. For each of these items, we were able to perform alternative procedures to verify that the amounts charged to the program were appropriate and there are no questioned costs. However, the lack of review increases the risk that inappropriate payroll costs may be charged to the program. We recommend management implement procedures to ensure that all employee payroll submissions are properly reviewed, and payroll is appropriately charged to the correct cost center or program.
2022-045 Oregon Health Authority Submit required FFATA reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements; 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases; 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.268: 5 NH23IP922626; 6 NH23IP922626; 93.323: 6 NU50CK000541; 93.958: 1B09SM083823, 2021; 93.959: 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department?s subawards subject to FFATA reporting during the audit period. We determined: ? Five of 30 Mental Health Block Grant (MHBG) subawards were not reported, totaling $4.2 million in obligations. ? 12 of 65 Substance Abuse Block Grant (SABG) subawards were not reported, totaling $6.2 million in obligations. ? Four of 37 Epidemiology and Laboratory Capacity (ELC) subawards were not reported, totaling almost $55.5 million in obligations. ? Five of 39 Immunization Cooperative Agreements subawards were not reported, totaling $6.3 million in obligations. Of the total not reported, one SABG, one ELC, and two Immunization subawards were not reported in the FSRS due to oversights in the department?s reporting process. The remaining unreported subawards resulted from the department?s suspension of FFATA reporting stemming from the federal replacement of the DUNS number with the Unique Entity Identifier (UEI) in May 2022. The department did not have UEI numbers for all subrecipients at the time of the replacement which prevented the department from submitting accurate reports. FFATA reporting was suspended through the end of state fiscal year 2022 and into the following state fiscal year. Although the department suspended FFATA reporting in the FSRS, a tracking spreadsheet was maintained that included all subaward award information needed for reporting once reporting is resumed. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management implement controls to ensure all subawards are appropriately tracked and reported.
2022-049 Oregon Health Authority Return overdraw of reclassified FEMA expenditures Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements (COVID-19); 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (COVID-19) Federal Award Numbers and Years: 93.268: 5 NH23IP922626 (COVID-19); 6 NH23IP922626 (COVID-19); 93.323: 6 NU50CK000541 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: 93.268: $36,783 (known) (COVID-19); 93.323: $73,333 (known) (COVID-19) Criteria: 2 CFR 200.403 During the COVID-19 pandemic, the Oregon Health Authority (department) spent money from Federal Emergency Management Agency (FEMA) awards to address needs in addressing the pandemic. Due to delays in receiving federal reimbursement for the expenditures, the department reclassified the expenditures to other programs where reimbursements would occur timelier. In our testing of Activities Allowed or Unallowed, we reviewed two individually significant items in the accounting system reclassifying 398 and 914 individual expenditures from the FEMA grants to the Immunization Cooperative Agreements program and Epidemiology and Laboratory Capacity program, respectively. Based upon the account coding of the original transactions, all of the reclassifications were allowable and consistent with program requirements. However, we found several transactions were reclassified twice, resulting in an excess of $36,783 charged to the Immunization program and $73,333 charged to the Epidemiology program. The reclassifications were completed in two batches and the managerial review of the reclassifying transactions failed to detect some transactions were included in both batches. We recommend department management correct the entries and reimburse excess cash drawn to the federal agency for unallowable costs. We also recommend department management revise the review procedures to verify that the same expenditure transactions are not duplicated in multiple batches.
2022-051 Oregon Health Authority Correct expenditures charged to the incorrect program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (COVID-19) Federal Award Numbers and Years: 6 NU50CK000541 (COVID-19) Compliance Requirements: Activities Allowed or Unallowed Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: $356,050 (COVID-19) Criteria: 2 CFR 200.302 To address the COVID-19 pandemic, the Center for Disease Control (CDC) awarded the Oregon Health Authority (department) over $495 million in additional funding beyond the normal funding levels for the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program. The funding was awarded for specific purposes such as enhancing detection, reopening schools, and enhancing detection expansion. The purposes of these awards generally do not allow for expenditures directly related to operating the COVID-19 vaccine clinics. In our testing, we identified two payments totaling $356,050 relating to emergency medical technicians attending vaccine clinics to assist if those receiving the vaccine had adverse reactions and required medical attention. Per department management, the transactions should have been charged to a different grant provided by the Federal Emergency Management Agency (FEMA). The error was caused by incorrect account coding when the invoice was processed. Other transactions under this contract were properly charged to the FEMA grant. We recommend management correct the accounting error and ensure the expenditures are charged to the correct programs. We also recommend the department determine if there are additional questioned costs relating to the advanced cash draw as the federal programs have different timing for federal reimbursements.
2022-052 Oregon Health Authority Improve review of expenditure transactions Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (COVID-19) Federal Award Numbers and Years: 6 NU50CK000541, 2021 (COVID-19) Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: $35,416 (known) (COVID-19) Criteria: 2 CFR 200.303 As part of our testing, we reviewed expenditures charged to the program to ensure they were properly approved and an appropriate use of program resources. We randomly selected 25 of 2,355 non-payroll transactions as the basis for our testing. For one of the transactions, there was no evidence the expenditures had been reviewed and approved as appropriate expenditures for the program. The specific transaction was for cell phones and data plans on wireless devices and consisted of 584 separate devices. Only 24 (2.5%) of those devices had been approved by a manager. The department will pay the vendor for the full amount of the invoice. Managers are expected to review the charges for their unit and verify they are directed to the proper cost center. The $35,416 in questioned costs represents the charges for the devices without approval. Also, during fiscal year 2022, payroll for the department was processed through the Oregon State Payroll Application (OSPA). As part of each monthly payroll cycle, managers are expected to review and approve employee?s reported hours to ensure expenditures are accurate and are billed to the correct program(s). Although state policy requires managers to review the timesheets, the automated controls in the system will process the payroll without a review, effectively making the managerial review optional. The OSPA was retired as of November 30, 2022; however, the replacement payroll system operates in a similar manner for managerial review. As part of our testing of payroll expenditures, we found one of 25 randomly selected timesheets were not reviewed by a manager prior to release into the payroll system. We were able to perform alternative procedures to verify the amounts charged to the program were appropriate and there are no questioned costs. The lack of review increases the risk that inappropriate costs may be charged to federal programs. We recommend management ensure wireless device charges are properly reviewed, and expenditures are charged to the correct cost center or program. We also recommend management implement procedures to ensure all employee payroll submissions are reviewed and approved by program management.
2022-053 Oregon Health Authority Improve financial reporting accuracy Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (COVID-19) Federal Award Numbers and Years: 6 NU50CK000541, 2020 (COVID-19); 6 NU50CK000541, 2021 (COVID-19) Compliance Requirements: Reporting Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: 2021-022 Questioned Costs: N/A Criteria: 2 CFR 200.328 In response to the COVID-19 pandemic, the Centers for Disease Control (CDC) awarded states substantial funds for the purpose of addressing the pandemic at the state level. Among other requirements, states are required to submit monthly financial reports to the CDC providing totals spent on travel, payroll, equipment, and other categories. During the fiscal year 2021 audit, we reported a material weakness relating to the accuracy of the amounts reported to the CDC. The same issue persisted throughout fiscal year 2022. As of June 30, 2022, the department had not taken the necessary actions to implement the prior recommendations and had not fully corrected the reports submitted in fiscal years 2021 and 2022. However, as of March 2023, the department had implemented the appropriate corrective actions and the previously inaccurate reports have been updated, including the reports for fiscal year 2022. Audit standards require that we report on the status as of June 30, 2022. We recommend department management maintain the necessary internal controls to ensure the monthly financial reports are accurate and agree to the accounting records.
2022-045 Oregon Health Authority Submit required FFATA reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements; 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases; 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.268: 5 NH23IP922626; 6 NH23IP922626; 93.323: 6 NU50CK000541; 93.958: 1B09SM083823, 2021; 93.959: 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department?s subawards subject to FFATA reporting during the audit period. We determined: ? Five of 30 Mental Health Block Grant (MHBG) subawards were not reported, totaling $4.2 million in obligations. ? 12 of 65 Substance Abuse Block Grant (SABG) subawards were not reported, totaling $6.2 million in obligations. ? Four of 37 Epidemiology and Laboratory Capacity (ELC) subawards were not reported, totaling almost $55.5 million in obligations. ? Five of 39 Immunization Cooperative Agreements subawards were not reported, totaling $6.3 million in obligations. Of the total not reported, one SABG, one ELC, and two Immunization subawards were not reported in the FSRS due to oversights in the department?s reporting process. The remaining unreported subawards resulted from the department?s suspension of FFATA reporting stemming from the federal replacement of the DUNS number with the Unique Entity Identifier (UEI) in May 2022. The department did not have UEI numbers for all subrecipients at the time of the replacement which prevented the department from submitting accurate reports. FFATA reporting was suspended through the end of state fiscal year 2022 and into the following state fiscal year. Although the department suspended FFATA reporting in the FSRS, a tracking spreadsheet was maintained that included all subaward award information needed for reporting once reporting is resumed. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management implement controls to ensure all subawards are appropriately tracked and reported.
2022-035 Department of Human Services Improve controls over benefit time tracking and discontinuance of federal funding Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: $1,866 known Criteria: 45 CFR 264.1 Federal regulations prohibit federal funding to families that include an adult head-of-household who has received federal assistance for a cumulative of 60 months, and who do not have an allowed exception. The Oregon Department of Human Services? (department) case management system, Oregon Eligibility (ONE), tracks months counting towards the federal limit. When 60 months is reached, ONE sends an indicator to the financial subsystem containing funding coding. If Temporary Assistance for Needy Families (TANF) benefits continue, they are to be funded with state funds. The population of cases identified in ONE as having reached 60 cumulative federal months is obtained from the quarterly performance data reports compiled by a service provider. As stated in a separate finding, titled `Ensure performance data reports are complete and accurate,? we determined the data reports are not complete or accurate, therefore, the population of cases over 60 federal months is also incomplete. However, we tested some cases in the reports to verify ONE was accurately counting federal months and to determine if federal funding was appropriately discontinued. We randomly selected ten cases from an incomplete population of 3,193 and found one case where federal funding inappropriately continued after reaching 60 months due to a coding issue within the financial subsystem, resulting in federal overpayments of $1,944 for recurring monthly cash assistance benefits, and $1,866 for expenses related to seeking employment (JOBS) in fiscal year 2022. The department was aware of the cash assistance coding issue and the JOBS coding issue as early as October 2021. A $5.6 million correction for regular cash assistance was made in accounting records in September 30, 2022, which corrected the cash assistance benefits portion of the error noted above. The JOBS coding issue has yet to be corrected in accounting records and the department did not have an adjustment total readily available. As the regular cash assistance correction surpassed $5 million, we have reasonable assurance that the uncorrected federal JOBS payments also exceed $25,000 in likely questioned costs. We recommend department management make timely corrections to federal/state coding splits in the financial subsystem and also make timely corrections in state accounting records. We also recommend the department reimburse the federal agency for unallowable costs.
2022-036 Department of Human Services Ensure performance data reports are complete and accurate Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Reporting Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: 2021-009, 2020-013, 2019-008 Questioned Costs: N/A Criteria: 45 CFR 265.7(a) and (b) and (f) Federal regulations require the department to collect monthly and report quarterly certain financial and non-financial data elements for services paid with Temporary Assistance for Needy Families (TANF) federal funding in the ACF-199 TANF data report. Federal regulations also require the department to report data quarterly for TANF eligible clients whose benefits are paid with designated state funds called maintenance of effort (MOE) in the ACF-209 SSP-MOE data report. Both data reports should be supported by applicable performance records. During fiscal year 2021, the department transitioned key aspects of the TANF program to Oregon Eligibility (ONE) for case management, while TANF child welfare payments continued to be recorded in OR-Kids the child welfare system. The department contracts with a service provider to extract data from ONE and OR-Kids to populate the data reports. Program staff currently work with the service provider to obtain comprehensible data reports prior to submission to review them for errors and when found, each issue is logged as a defect for the service provider to correct. The department and the U.S. Administration for Children and Families identified data reports submitted for state fiscal year 2022 were incorrect. The federal quarterly report ended September 30, 2021, was revised and resubmitted but still had likely errors according to program staff. Quarterly reports ended December 31, 2021 (Q1), March 31, 2022 (Q2), and June 30, 2022 (Q3), were corrected and resubmitted in February 2023. Data reports are comprised of individual component reports identified by ?T? for ACF-199 TANF and ?M? for ACF-209 MOE. We reviewed the resubmitted Q1, Q2, and Q3 reports and found: ? The Q1 TANF T2 and MOE M2 reports corrected a prior known defect. The fields identifying work participation have populated associated fields with job type and hours. ? The Q3 T6 report showing number of applications, number and types of families, and amount of assistance, reported $4.5 million more than supported by accounting records. ? The April 2022 T1 report contained 4,035 case numbers not found in the underlying system records, and 1,081 from system records not reported in the T1 report. ? OR-Kids cases in the Q1, Q2, and Q3 T1 24 of 45 fields left blank. ? In 10 of 21,171 cases recorded as having surpassed the federal funding limit of 60 months in the Q1, Q2, and Q3 T2 reports, we found three where the T2 reports did not agree to support in ONE. As the performance data reports are known to be incomplete and inaccurate, we are unable to test them for compliance with federal reporting requirements. To date, the implementation of ONE has not resolved findings related to performance data reporting, which have been ongoing since fiscal year 2010. Though the department has yet to receive a Service Organization Control (SOC) report from the service organization administering ONE and compiling data reports the department is in the process of contracting for a SOC report. Without an annual SOC report, the department does not have assurance controls are functioning as intended at the service organization for the TANF program. We recommend department management continue to review ACF-199 and ACF-209 reports prior to submission and monitor known compilation defects to ensure performance data reports submitted are complete and accurate. We also recommend department management obtain an annual SOC report over the service organization?s internal controls for the ONE application.
2022-037 Department of Human Services Improve accuracy of cases reported as noncooperating with child support Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Special Tests and Provisions Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 45 CFR 264.30-31 Federal regulations require the department to refer all appropriate individuals in the family of a child to the child support enforcement agency. If the department determines referred individuals are not cooperating, without good cause, in establishing, modifying, or enforcing a support order with respect to the child, then the department must reduce or deny assistance in the Temporary Assistance for Needy Families (TANF) program. The department faces reduced State family assistance grant payments for failure to enforce penalties against noncompliant individuals. In March 2020, the department established good cause exemptions due to Covid for all individuals. Noncooperation sanctions were reinstated in April 2021, by which time the department had moved its case management system to Oregon Eligibility (ONE). When a caseworker enters a child support noncooperation code in ONE, the system should automatically reduce TANF benefits. The population of cases identified in ONE as not cooperating with child support is obtained from the quarterly performance data reports compiled by a service provider. As stated in a separate finding, titled `Ensure performance data reports are complete and accurate,? we determined the data reports are not complete or accurate, therefore, the population of cases not cooperating with child support is also incomplete. However, we tested some cases in the reports to verify ONE was appropriately reducing benefits. The quarterly performance data reports for periods October 1, 2021, through June 30, 2022, consisted of 133 unique cases identified as not cooperating with child support. We randomly selected 14 cases and could not find support in ONE for noncooperation. The department identified one case entered in ONE incorrectly by a caseworker and the remaining cases had various nuances causing the performance data reports to retrieve the information incorrectly. All 14 cases were either cooperating with or not applicable to child support. The department also identified at least eight defects in child support data retrieval it reported to the service provider. We are unable to determine if ONE is correctly reducing TANF benefits when a case is not cooperating with child support. We recommend department management ensure noncooperative child support cases from ONE are completely and accurately reported in its performance data reports.
2022-038 Department of Human Services Ensure work participation rate calculation uses verified and accurate data Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Special Test and Provisions Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: 2021-010, 2020-014, 2019-009 Questioned Costs: N/A Criteria: 45 CFR 261.61-62, 65 Federal regulations require each state maintain adequate documentation, verification, and internal control procedures to ensure the accuracy of data used in calculating work participation rates. Each state must have procedures to count and verify reported hours of work and must comply with its Work Verification Plan as approved by the U.S. Department of Health and Human Services (DHHS). Oregon?s Work Verification Plan outlines a system of controls for how reported hours will be verified and documented, and for reviews and monitoring procedures to identify errors. Work participation hours are reported via the quarterly Temporary Assistance for Needy Families (TANF) ACF-199 data reports and for benefits paid with designated state funds called maintenance of effort (MOE), the ACF-209 reports. As stated in a separate finding, titled `Ensure performance data reports are complete and accurate,? we determined the data reports are not complete or accurate. However, we found the department did correct a previous issue in which work participation hours on the ACF-199 report were left blank. Although reports were known to be incomplete, we reviewed the reporting periods October 1, 2021, through June 30, 2022, to test for compliance of the Work Verification Plan. We reviewed 20 randomly selected ACF-199 cases from a population of 16,249, and 20 randomly selected ACF-209 cases from a population of 146,324 of participating clients for verification of work activity participation. We found: ? Five of 20 ACF-199 cases with reported participation hours did not agree with hours in the system of record TRACS. ? 14 of 20 ACF-199 cases lacked support for the reported hours. ? 9 of 20 ACF-209 cases lacked support for the reported hours. These inaccurate or unverified hours were reported to DHHS for use in calculating the work participation rate. If the state fails to follow the approved Work Verification Plan, DHHS may penalize the state. We recommend TANF program management ensure the work participation rate is calculated appropriately using verified and accurate participation data in adherence to the department?s Work Verification Plan. We also recommend program management review the system of controls and identify where improvements are needed to ensure compliance with the work verification plan.
2022-039 Department of Human Services Improve documentation of required income and benefit verifications Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Special Tests and Provisions Type of Finding: Material Weakness Prior Year Finding: 2021-011 Questioned Costs: N/A Criteria: 45 CFR 205.55 Federal regulations require each state to participate in the Income Eligibility and Verification System (IEVS), which for Oregon, includes using income and benefit screens accessible through Oregon Employment Department, Internal Revenue Service, and Social Security Administration, when making Temporary Assistance for Needy Families (TANF) eligibility determinations. The department?s current procedure instructs caseworkers to narrate ?IEVS checked? in the case management system, Oregon Eligibility (ONE), after reviewing all appropriate IEVS screens at the time of eligibility determination. The department submitted change requests to the eligibility system?s service provider that would prohibit ONE from paying benefits until all IEVS screens are checked; however, the system change has not yet been completed. From a population of 105,267 TANF benefit payments recorded in ONE we randomly selected a sample of 40 and two additional individually significant payments for testing. We found in 16 cases, there was no narration of the IEVS check by caseworkers, in either ONE or the former narrative system. We verified these clients did meet the TANF eligibility criteria related to IEVS screens, however, by not providing assurance of verification of the use of IEVS screens, the department increases the risk of providing benefits to TANF ineligible applicants. We recommend department management ensure verification of income and benefits with IEVS screens is clearly documented in client case files when determining client eligibility.
2022-040 Department of Human Services Improve controls to ensure eligibility criteria are met Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: $9,569 (known); $931,750 (likely) Criteria: 45 CFR 264.1; Oregon TANF State Plan The State of Oregon Temporary Assistance for Needy Families (TANF) State Plan (Plan) defines financial neediness criteria with its adjusted income limit tables. Federal regulations establish 60 cumulative months as the length of time a client may receive federal TANF assistance. The department uses its case management system, Oregon Eligibility (ONE), to count federal-eligible benefit months, and when 60 months is reached, an indicator is sent to the financial subsystem to change federal funding to state funding. From a population of 105,267 TANF benefit payments recorded in ONE, we randomly selected a sample of 40 and two additional individually significant payments for testing. We found: ? One sample?s financial eligibility information included a disaster relief benefit without details showing the date of payment and the covered time period. As a result, auditors and the department are unable to determine if this case met financial eligibility criteria, resulting in questioned costs of $1,311. ? One individually significant case?s child support and spousal support were entered incorrectly into ONE. The countable income at time of certification did not meet the adjusted income limit, making the client ineligible for TANF benefits. Questioned costs for this case total $8,258. We recommend department management ensure federally-funded client benefits are paid on behalf of eligible individuals, and documentation is retained to support eligibility decisions. We also recommend department management correct the identified error cases and reimburse the federal agency for questioned costs.
2022-032 Oregon Housing and Community Services Ensure subrecipient risk assessments and fiscal monitoring are performed and required grant information is communicated timely to subrecipients Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2001ORE5C3, 2020 (COVID-19); 2102ORLIEA, 2021; 2102ORE5C6 , 2021 (COVID-19); 2202ORLIEA, 2022 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR ? 200.332(a) ? (h) Federal regulations require that pass-through entities evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward to determine the extent and scope of subrecipient monitoring activities. Monitoring activities should be based on the results of a given subrecipient?s determined risk. Pass-through entities must also communicate certain award information to subrecipients as the time of the subaward. The department, as the pass-through entity, has long-established subrecipient monitoring procedures broken into two categories: program and fiscal monitoring. Program monitoring is performed by program-specific staff and focuses on requirements related to certain aspects of Activities Allowed and Client Eligibility. During FY2022, the department performed program monitoring activities as planned. Fiscal monitoring reviews compliance requirements related to Allowable Costs, Activities Allowed, and Earmarking. However, fiscal monitoring activities were limited due to staff turnover. As a result, limited fiscal monitoring procedures were performed for 5 of 17 subrecipients, and fiscal monitoring risk assessments were not performed for any of the 17 subrecipients. Without the performance of subrecipient risk assessments and adequate fiscal monitoring, the department risks distributing program funds to subrecipients out of compliance with federal program requirements. Additionally, we reviewed 5 randomly selected subrecipients to determine whether all required grant award information was communicated at the time of the subaward. For all of the 5 subrecipients reviewed, only some of the required information was communicated at the time of the award. The required information missing in the original grant agreements was communicated via agreement amendments several months later. Without timely communication of required grant information, subrecipients may not have all the information they need for the subaward they received. We recommend department management ensure subrecipient risk assessments are performed for all subrecipients and ensure required fiscal monitoring activities are performed based on the results of the risk assessments. We also recommend department management ensure all required award information is communicated to subrecipients at the time of the subawards.
2022-033 Oregon Housing and Community Services Ensure financial reports are submitted Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2002ORLIEA, 2020; 2102ORE5C6, 2021 (COVID-19) Compliance Requirement: Reporting Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: 2021 ? 012 Questioned Costs: N/A Criteria: 2 CFR ? 200.303(a), (c)-(d); 2 CFR ? 200.328 Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance the department is managing the federal award in compliance with the terms and conditions of the federal award. Additionally, management is responsible for evaluating and monitoring the department?s compliance with the terms and conditions of federal awards and taking prompt action when instances of noncompliance are identified. Federal Financial Reports, SF-425?s, are required to be submitted annually for each open grant award ninety days after the end of the federal fiscal year. The department did not submit SF-425?s for two of the four open grants for the federal fiscal period ended September 30, 2021. This is an improvement from the prior fiscal year when the department hadn?t submitted any of the SF-425 reports for open grants. Department management cited a federal reporting system issue where awards are not appropriately tied to the correct grant identification number, which has hindered their ability to submit financial reports. As a result, the department was not in compliance with financial reporting requirements in accordance with the terms and conditions of their grant agreements. We recommend department management work with their federal partners to determine if unsubmitted reports should be completed and to ensure reporting compliance in future fiscal periods.
2022-034 Oregon Housing and Community Services Ensure review of subrecipient requests for funds verifies immediate cash needs are supported Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2001ORE5C3, 2020 (COVID-19); 2102ORLIEA, 2021; 2102ORE5C6, 2021 (COVID-19); 2202ORLIEA, 2022 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR ? 200.305(b), (b)(1); 2 CFR ? 200.508 Federal regulations require that auditees maintain documentation as needed for the performance of audit procedures related to the Single Audit. Additionally, regulations require payment advances should be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the subrecipient for carrying out the approved program. We reviewed 60 sample cash draws and were unable to obtain adequate supporting documentation for 4 subrecipient requests for reimbursement/advances demonstrating they were appropriate and for immediate cash needs. We also identified an advance payment for which there was not an adequate explanation indicating why an advance was needed. These 5 exceptions totaled $124,304 in expenditures. Department management cited a breakdown in control process and communicated their intention to train relevant staff to ensure adequate support is obtained. Without adequate verification of cash needs, the department could be sending funds to subrecipients that are not for a reimbursement of expenditures or immediate cash needs. We recommend department management strengthen internal controls to ensure support for subrecipient requests for funds adequately documents they are appropriate and for immediate cash needs.
2022-032 Oregon Housing and Community Services Ensure subrecipient risk assessments and fiscal monitoring are performed and required grant information is communicated timely to subrecipients Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2001ORE5C3, 2020 (COVID-19); 2102ORLIEA, 2021; 2102ORE5C6 , 2021 (COVID-19); 2202ORLIEA, 2022 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR ? 200.332(a) ? (h) Federal regulations require that pass-through entities evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward to determine the extent and scope of subrecipient monitoring activities. Monitoring activities should be based on the results of a given subrecipient?s determined risk. Pass-through entities must also communicate certain award information to subrecipients as the time of the subaward. The department, as the pass-through entity, has long-established subrecipient monitoring procedures broken into two categories: program and fiscal monitoring. Program monitoring is performed by program-specific staff and focuses on requirements related to certain aspects of Activities Allowed and Client Eligibility. During FY2022, the department performed program monitoring activities as planned. Fiscal monitoring reviews compliance requirements related to Allowable Costs, Activities Allowed, and Earmarking. However, fiscal monitoring activities were limited due to staff turnover. As a result, limited fiscal monitoring procedures were performed for 5 of 17 subrecipients, and fiscal monitoring risk assessments were not performed for any of the 17 subrecipients. Without the performance of subrecipient risk assessments and adequate fiscal monitoring, the department risks distributing program funds to subrecipients out of compliance with federal program requirements. Additionally, we reviewed 5 randomly selected subrecipients to determine whether all required grant award information was communicated at the time of the subaward. For all of the 5 subrecipients reviewed, only some of the required information was communicated at the time of the award. The required information missing in the original grant agreements was communicated via agreement amendments several months later. Without timely communication of required grant information, subrecipients may not have all the information they need for the subaward they received. We recommend department management ensure subrecipient risk assessments are performed for all subrecipients and ensure required fiscal monitoring activities are performed based on the results of the risk assessments. We also recommend department management ensure all required award information is communicated to subrecipients at the time of the subawards.
2022-033 Oregon Housing and Community Services Ensure financial reports are submitted Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2002ORLIEA, 2020; 2102ORE5C6, 2021 (COVID-19) Compliance Requirement: Reporting Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: 2021 ? 012 Questioned Costs: N/A Criteria: 2 CFR ? 200.303(a), (c)-(d); 2 CFR ? 200.328 Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance the department is managing the federal award in compliance with the terms and conditions of the federal award. Additionally, management is responsible for evaluating and monitoring the department?s compliance with the terms and conditions of federal awards and taking prompt action when instances of noncompliance are identified. Federal Financial Reports, SF-425?s, are required to be submitted annually for each open grant award ninety days after the end of the federal fiscal year. The department did not submit SF-425?s for two of the four open grants for the federal fiscal period ended September 30, 2021. This is an improvement from the prior fiscal year when the department hadn?t submitted any of the SF-425 reports for open grants. Department management cited a federal reporting system issue where awards are not appropriately tied to the correct grant identification number, which has hindered their ability to submit financial reports. As a result, the department was not in compliance with financial reporting requirements in accordance with the terms and conditions of their grant agreements. We recommend department management work with their federal partners to determine if unsubmitted reports should be completed and to ensure reporting compliance in future fiscal periods.
2022-034 Oregon Housing and Community Services Ensure review of subrecipient requests for funds verifies immediate cash needs are supported Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2001ORE5C3, 2020 (COVID-19); 2102ORLIEA, 2021; 2102ORE5C6, 2021 (COVID-19); 2202ORLIEA, 2022 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR ? 200.305(b), (b)(1); 2 CFR ? 200.508 Federal regulations require that auditees maintain documentation as needed for the performance of audit procedures related to the Single Audit. Additionally, regulations require payment advances should be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the subrecipient for carrying out the approved program. We reviewed 60 sample cash draws and were unable to obtain adequate supporting documentation for 4 subrecipient requests for reimbursement/advances demonstrating they were appropriate and for immediate cash needs. We also identified an advance payment for which there was not an adequate explanation indicating why an advance was needed. These 5 exceptions totaled $124,304 in expenditures. Department management cited a breakdown in control process and communicated their intention to train relevant staff to ensure adequate support is obtained. Without adequate verification of cash needs, the department could be sending funds to subrecipients that are not for a reimbursement of expenditures or immediate cash needs. We recommend department management strengthen internal controls to ensure support for subrecipient requests for funds adequately documents they are appropriate and for immediate cash needs.
2022-058 Department of Human Services Perform timely reconciliations of refinanced OR-Kids transactions Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.667 Social Services Block Grant Federal Award Numbers and Years: 2101ORSOSR, 2021; 2201ORSOSR, 2022 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $1,308,457 (likely) Criteria: 42 USC 1397a(c); 45 CFR 75.386a(2); 45 CFR 96.30b(2) According to federal requirements, to be eligible for federal funding, expenditures must be expended in the fiscal year allotted or in the succeeding fiscal year (period of performance). Additionally, federal post-closeout requirements stipulate the return of any funds due because of later refunds, corrections, or other transactions. As part of the grant closeout process, block grants also require the grantees to report the total funds expended and the date of the last expenditure. Grant closeout is the process by which the federal awarding agency determines that all applicable administrative actions and all required work have been completed. Social Services Block Grant (SSBG) has expenditures originating from the child welfare system, OR-Kids. OR-Kids is used to manage placements, eligibility, payments, and other case information. When various corrections are initiated, OR-Kids can re-process transactions as far back as January 1, 2008. For some placement corrections, OR-Kids processed the recovery of the funds in a state grant (Miscellaneous Other Fund grant), instead of the federal grant. To date, the department has not completed permanent fixes to the OR-Kids system to prevent these re-processing errors from occurring. During fiscal year 2022, the department was reconciling the Miscellaneous Other Fund grant and identified refunds related to SSBG. The refinanced expenditures reduced the amount of SSBG expenditures originally reported in closed grant awards. Instead of submitting a refund, the department identified expenditures recorded in subsequent grants that could have been used to backfill the reduction of expenditures. Allowable expenditures, that met the period of performance, were subsequently moved. To illustrate, a total of $1.3 million of expenditures were moved in the accounting system from grant award 21 (federal fiscal year 2021) to grant award 20. The department then moved expenditures totaling $1.2 million from grant award 20 to grant award 19. This process continued for all grant awards going back to grant award 11 (federal fiscal year 2011). The table below illustrates the movement of expenditures between grant awards. [See schedule of findings/questioned costs for table] Although the department only moved expenditures that qualified for each respective period of performance, we question whether the federal awarding agency would allow the department to backfill the $1.3 million of expenditures in question after grant closeout had been completed. We recommend department management conduct more timely reconciliations of OR-Kids refinancing adjustments to ensure adjustments are made during the related periods of performance. We further recommend management work with its federal awarding agency to determine if it is appropriate to backfill program expenditures between grants to account for the reduction in expenditures created by the reconciliation process. If not appropriate, the questioned costs should be repaid to the federal awarding agency.
2022-047 Oregon Health Authority Implement controls to comply with subrecipient monitoring requirements Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.788 Opioid STR (Non-major program) Federal Award Numbers and Years: H79TI081716, 2020; H79TI083316, 2021 Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: 2019-019 Questioned Costs: N/A Criteria: 45 CFR 75.303(d); 45 CFR 75.351; 45 CFR 75.352(b) and (d) Federal regulations require that pass-through entities evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining appropriate subrecipient monitoring activities. Monitoring activities should be completed based on the results of the subrecipient?s determined risk. Federal regulations also require grantees take prompt action when instances of noncompliance are identified in audit findings. The Health Systems Division of the Oregon Health Authority (department) developed a formal process for performing risk assessments to determine appropriate monitoring activities and developed a tool to document post award monitoring in March of 2020, and for three years, the department has pointed to these procedures as actions taken to partially correct the original 2019 finding. However, the department has yet to implement these or other procedures, and the Opioid program has no documented monitoring plan in place. Federal regulations require the department, as a pass-through entity, to determine if the recipients of disbursements of federal funds are subrecipients or contractors. The subrecipient and contractor determination will impact how program expenditures are reported on the Schedule of Expenditures of Federal Awards (SEFA). Out of 75 contracts with 59 subrecipients, we reviewed 15 contracts with 10 subrecipients and based on the contracts? listed deliverables, we determined five of them did not appear to meet the definition of a subrecipient. Department management could not support its subrecipient determinations and could not identify who made the decisions. As a result, the SEFA may incorrectly report $751,911 as pass-through funds instead of direct expenditures. We recommend department management comply with subrecipient monitoring requirements by implementing and documenting a procedure that evaluates each subrecipient?s risk of noncompliance for the purpose of determining and performing the appropriate monitoring for each subrecipient. We also recommend department management implement procedures to ensure federal subrecipient versus contractor determinations result in accurate reporting on the SEFA.
2022-048 Oregon Health Authority Improve review of federal performance progress reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.788 Opioid STR (Non-major program) Federal Award Numbers and Years: H79TI081716, 2020; H79TI083316, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency Prior Year Finding: 2019-020 Questioned Costs: N/A Criteria: 45 CFR 75.303(a); 45 CFR 75.342(b); Opioid STR Notice of Awards Federal regulations require performance progress reports (reports) be submitted semi-annually and include an overview of the goals and objectives accomplished during the funding period as stated in the grants? funding opportunity announcements. In addition, federal regulations require award grantees to establish and maintain effective internal control that provides reasonable assurance the award is managed in compliance with regulations and terms and conditions of the award. Effective controls may include review and approval of reports for completeness and accuracy. The Health Systems Division of the Oregon Health Authority (department) developed a tool to document post award monitoring in March of 2020, and for three years, the department has pointed to this tool as an action taken to ensure reports are complete and accurate. Although the department has yet to implement this tool, we found evidence of other internal controls that were partially implemented. Program now utilizes collaborative online software called Smartsheet which allows a contracted evaluator to compile subrecipient performance data the department can monitor and edit in real time. The department uses the Smartsheet as support for progress report data. We found some key data elements in the SOR2 year 2 progress report did not agree to support in Smartsheet. Program stated they reviewed a different spreadsheet supplied by the evaluator, not Smartsheet, which had totals agreeing to the submitted report. However, the department did not retain this additional spreadsheet. Without retaining the underlying support used for review, we are unable to assess the effectiveness of the department?s review of the report prior to submission. Program now requires manager review of reports prior to submission. We found evidence of manager review of the SOR2 year 2 progress report, however it was dated two days after the report was submitted. Ineffective controls could result in a misrepresentation of the grant?s performance. We recommend department management implement internal controls to ensure performance progress reports are complete and accurate prior to report submission.
2022-041 Oregon Health Authority Ensure expenditures of federal funds are recorded to the appropriate program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services (COVID-19), 93.959 Block Grants for Prevention and Treatment of Substance Abuse (COVID-19) Federal Award Numbers and Years: 93.958: 1B09SM083994, 1B09SM085378 (COVID-19); 93.959: 1B08TI083513, 1B08TI083963 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: 93.958 - $2,268,421 (known COVID-19) Criteria: 2 CFR 200.303; 42 USC 300x-1 The department was required to submit a spending plan documenting the intended use of the awarded COVID-19 funding allocations under the Mental Health Block Grant (MHBG) and Substance Abuse Block Grant (SABG). The expenditure of COVID-19 funding should align with each block grant?s approved spending plan. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the Federal award. Our testing of state fiscal year 2022 MHBG COVID-19 expenditures identified $10.4 million in workforce development incentive payments inappropriately recorded under the MHBG. Further inquiry into the payments revealed the department determined during state fiscal year 2023 these expenditures were not included in the MHBG COVID-19 spending plans and were not allowable activities under the MHBG. The department determined incentive payments totaling $8.1 million in COVID-19 expenditures should have been recorded under the SABG in accordance with the SABG COVID-19 spending plans. The department subsequently moved the $8.1 million of the combined $10.4 million total COVID-19 incentive payment expenditures to the SABG; however, the remaining $2.3 million in incentive payment expenditures were left in the MHBG as a funding source had yet to be determined. An adjustment to the Schedule of Expenditures of Federal Awards (SEFA) was required to move the $8.1 million in COVID-19 spending from the MHBG to SABG. The remaining $2.3 million is considered questioned costs under the MHBG. We recommend department management ensure controls are properly designed and implemented to record only allowable expenditures to the appropriate federal programs.
2022-042 Oregon Health Authority Ensure expenditures of federal funds are for allowed activities Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services Federal Award Numbers and Years: 1B09SM083823, 2021 Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: $525,272 (known) Criteria: 42 USC 300x-5(a)(3) Mental Health Block Grant (MHBG) funds may not be expended on the purchase, construction, or permanent improvement of any building or other facility other than minor remodeling. Substance Abuse and Mental Health Services Administration?s (SAMHSA) standard funding restriction guidance defines minor alterations and renovations as the lesser of 25% of the budget period or $150 thousand. Additionally, all minor alterations and renovations must be approved by SAMHSA. During our testing of MHBG subrecipient contracts entered into during state fiscal year 2022, we noted one contract included payment for the remodeling of an existing building owned by the subrecipient. A payment of $525,272 was processed in December 2021 for the remodeling expenses as specified in the contract's payment provisions. However, this amount exceeds SAMHSA's threshold for minor alterations and renovations and is not allowed under the MHBG. We recommend department management ensure controls are properly designed and implemented to record only allowable expenditures to the MHBG. We further recommend department management seek SAMHSA approval for minor alterations and renovations.
2022-043 Oregon Health Authority Implement controls to ensure subrecipients are appropriately identified and monitored Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.331; 45 CFR 75.352(b); 45 CFR 75.352(d) Federal regulations require pass-through entities to determine if the recipients of disbursements of federal funds are subrecipients or contractors. The subrecipient and contractor determination will impact which federal compliance requirements recipients are subject to and how program expenditures are reported on the Schedule of Expenditures of Federal Awards (SEFA). For recipients meeting the definition of a subrecipient, federal regulations require pass-through entities to evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining appropriate subrecipient monitoring activities. Monitoring activities should be completed based on the results of the subrecipient?s determined risk to ensure subawards are used appropriately. We reviewed the department?s classification of a sample of eight of 40 Mental Health Block Grant (MHBG) and 11 of 76 Substance Abuse Block Grant (SABG) recipients of federal funds. We judgmentally selected an additional 11 MHBG and 30 SABG recipients for review after our review of the initial sample of recipients identified inconsistencies in the classification of recipients. Based on the following inconsistencies identified in our review, it is unclear if the department correctly classified recipients as subrecipients or contractors and the related expenditures are reported accordingly. As a result, the SEFA may incorrectly report pass-through or direct expenditures. ? One recipient of MHBG funds and 13 recipients of SABG funds were classified as contractors by the department; however, other recipients providing the same services were classified as subrecipients. As they were identified as contractors, a SEFA correction of $1.4 million was made to report as direct expenditures rather than pass-through expenditures. ? Three recipients of MHBG funds and one recipient of SABG funds were classified as subrecipients by the department, but it was unclear if each met the definition of a subrecipient. ? One recipient of MHBG funds was classified as a contractor and appeared to meet the definition of a contractor; however, payments made to this recipient were recorded as pass-through expenditures. A SEFA correction of $329 thousand was made to report as direct expenditures rather than pass-through expenditures. ? One recipient of SABG funds was classified as neither contractor nor subrecipient. A SEFA correction of $215 thousand was made to report as direct expenditures rather than pass-through expenditures. We also inquired of the department?s risk assessment and monitoring activities for subrecipients. Based on our inquiries, the department does not have a formal implemented process for performing risk assessments to determine appropriate monitoring activities. Moreover, the department has not implemented a formal process to ensure subrecipients comply with federal regulations, terms and conditions of the subaward, and that subaward performance goals are achieved. If subrecipient monitoring is not performed and documented, subawards could be used for unauthorized purposes and performance goals not met. We recommend department management ensure recipients of federal funds are appropriately identified as subrecipients or contractors and the corresponding disbursement of federal funds are appropriately reported as direct or pass-through expenditures. We further recommend department management comply with subrecipient monitoring requirements, develop and implement internal controls to ensure risk assessments are performed and documented for each subrecipient, and monitoring activities are completed and documented according to risk assessment results.
2022-044 Oregon Health Authority Implement a consistent methodology for calculation of maintenance of effort Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness Prior Year Finding: N/A Questioned Costs: N/A Criteria: 42 USC 300x-2(a)(1)(C); 42 USC 300x-4(b)(1); 42 USC 300x-9(c)(1); 42 USC 300x-22(b)(1)(C); 42 USC 300x-30(a); 2 CFR 200.303 The Mental Health Block Grant and Substance Abuse Block Grant are subject to various Maintenance of Effort and Earmarking requirements. These requirements ensure the department meets minimum expenditure thresholds. Federal regulations require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Based on auditor recalculations, we determined the department was in compliance with the applicable Maintenance of Effort and Earmarking requirements during state fiscal year 2022. However, we noted the following control weaknesses in the department?s calculations and demonstration of their compliance with the requirements: ? The department is required to expend 10% of the federal award for early serious mental illness and a first episode psychosis treatment services under the Mental Health Block Grant. The 10% set aside is calculated and budgeted when federal awards are granted. However, tracking of expenditures is not performed to ensure compliance is achieved. ? The department is required to maintain state expenditures for community mental health services and authorized substance abuse activities at a level not less than the average expenditures of the prior two state fiscal years. The department is also required to ensure expenditures for systems of integrated services for children with serious emotional disturbance and substance abuse treatment for pregnant women and women with dependent children is not less than the amount expended for these services in fiscal year 1994. The applicable expenditures were not consistently or accurately calculated by the department in each of the state fiscal years included in the Maintenance of Effort determinations. Additionally, no written procedures exist for the calculations. The department is at risk of noncompliance without controls in place to help ensure expenditures are tracked and calculations are consistently applied across fiscal years. We recommend department management implement controls to ensure applicable expenditures are adequately tracked and calculations applicable to the maintenance of effort requirements are consistently performed across fiscal years. We further recommend department management work with the federal awarding agency to submit corrected maintenance of effort totals to ensure appropriateness of future maintenance of effort determinations.
2022-045 Oregon Health Authority Submit required FFATA reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements; 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases; 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.268: 5 NH23IP922626; 6 NH23IP922626; 93.323: 6 NU50CK000541; 93.958: 1B09SM083823, 2021; 93.959: 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department?s subawards subject to FFATA reporting during the audit period. We determined: ? Five of 30 Mental Health Block Grant (MHBG) subawards were not reported, totaling $4.2 million in obligations. ? 12 of 65 Substance Abuse Block Grant (SABG) subawards were not reported, totaling $6.2 million in obligations. ? Four of 37 Epidemiology and Laboratory Capacity (ELC) subawards were not reported, totaling almost $55.5 million in obligations. ? Five of 39 Immunization Cooperative Agreements subawards were not reported, totaling $6.3 million in obligations. Of the total not reported, one SABG, one ELC, and two Immunization subawards were not reported in the FSRS due to oversights in the department?s reporting process. The remaining unreported subawards resulted from the department?s suspension of FFATA reporting stemming from the federal replacement of the DUNS number with the Unique Entity Identifier (UEI) in May 2022. The department did not have UEI numbers for all subrecipients at the time of the replacement which prevented the department from submitting accurate reports. FFATA reporting was suspended through the end of state fiscal year 2022 and into the following state fiscal year. Although the department suspended FFATA reporting in the FSRS, a tracking spreadsheet was maintained that included all subaward award information needed for reporting once reporting is resumed. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management implement controls to ensure all subawards are appropriately tracked and reported.
2022-041 Oregon Health Authority Ensure expenditures of federal funds are recorded to the appropriate program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services (COVID-19), 93.959 Block Grants for Prevention and Treatment of Substance Abuse (COVID-19) Federal Award Numbers and Years: 93.958: 1B09SM083994, 1B09SM085378 (COVID-19); 93.959: 1B08TI083513, 1B08TI083963 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: 93.958 - $2,268,421 (known COVID-19) Criteria: 2 CFR 200.303; 42 USC 300x-1 The department was required to submit a spending plan documenting the intended use of the awarded COVID-19 funding allocations under the Mental Health Block Grant (MHBG) and Substance Abuse Block Grant (SABG). The expenditure of COVID-19 funding should align with each block grant?s approved spending plan. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the Federal award. Our testing of state fiscal year 2022 MHBG COVID-19 expenditures identified $10.4 million in workforce development incentive payments inappropriately recorded under the MHBG. Further inquiry into the payments revealed the department determined during state fiscal year 2023 these expenditures were not included in the MHBG COVID-19 spending plans and were not allowable activities under the MHBG. The department determined incentive payments totaling $8.1 million in COVID-19 expenditures should have been recorded under the SABG in accordance with the SABG COVID-19 spending plans. The department subsequently moved the $8.1 million of the combined $10.4 million total COVID-19 incentive payment expenditures to the SABG; however, the remaining $2.3 million in incentive payment expenditures were left in the MHBG as a funding source had yet to be determined. An adjustment to the Schedule of Expenditures of Federal Awards (SEFA) was required to move the $8.1 million in COVID-19 spending from the MHBG to SABG. The remaining $2.3 million is considered questioned costs under the MHBG. We recommend department management ensure controls are properly designed and implemented to record only allowable expenditures to the appropriate federal programs.
2022-043 Oregon Health Authority Implement controls to ensure subrecipients are appropriately identified and monitored Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.331; 45 CFR 75.352(b); 45 CFR 75.352(d) Federal regulations require pass-through entities to determine if the recipients of disbursements of federal funds are subrecipients or contractors. The subrecipient and contractor determination will impact which federal compliance requirements recipients are subject to and how program expenditures are reported on the Schedule of Expenditures of Federal Awards (SEFA). For recipients meeting the definition of a subrecipient, federal regulations require pass-through entities to evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining appropriate subrecipient monitoring activities. Monitoring activities should be completed based on the results of the subrecipient?s determined risk to ensure subawards are used appropriately. We reviewed the department?s classification of a sample of eight of 40 Mental Health Block Grant (MHBG) and 11 of 76 Substance Abuse Block Grant (SABG) recipients of federal funds. We judgmentally selected an additional 11 MHBG and 30 SABG recipients for review after our review of the initial sample of recipients identified inconsistencies in the classification of recipients. Based on the following inconsistencies identified in our review, it is unclear if the department correctly classified recipients as subrecipients or contractors and the related expenditures are reported accordingly. As a result, the SEFA may incorrectly report pass-through or direct expenditures. ? One recipient of MHBG funds and 13 recipients of SABG funds were classified as contractors by the department; however, other recipients providing the same services were classified as subrecipients. As they were identified as contractors, a SEFA correction of $1.4 million was made to report as direct expenditures rather than pass-through expenditures. ? Three recipients of MHBG funds and one recipient of SABG funds were classified as subrecipients by the department, but it was unclear if each met the definition of a subrecipient. ? One recipient of MHBG funds was classified as a contractor and appeared to meet the definition of a contractor; however, payments made to this recipient were recorded as pass-through expenditures. A SEFA correction of $329 thousand was made to report as direct expenditures rather than pass-through expenditures. ? One recipient of SABG funds was classified as neither contractor nor subrecipient. A SEFA correction of $215 thousand was made to report as direct expenditures rather than pass-through expenditures. We also inquired of the department?s risk assessment and monitoring activities for subrecipients. Based on our inquiries, the department does not have a formal implemented process for performing risk assessments to determine appropriate monitoring activities. Moreover, the department has not implemented a formal process to ensure subrecipients comply with federal regulations, terms and conditions of the subaward, and that subaward performance goals are achieved. If subrecipient monitoring is not performed and documented, subawards could be used for unauthorized purposes and performance goals not met. We recommend department management ensure recipients of federal funds are appropriately identified as subrecipients or contractors and the corresponding disbursement of federal funds are appropriately reported as direct or pass-through expenditures. We further recommend department management comply with subrecipient monitoring requirements, develop and implement internal controls to ensure risk assessments are performed and documented for each subrecipient, and monitoring activities are completed and documented according to risk assessment results.
2022-044 Oregon Health Authority Implement a consistent methodology for calculation of maintenance of effort Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness Prior Year Finding: N/A Questioned Costs: N/A Criteria: 42 USC 300x-2(a)(1)(C); 42 USC 300x-4(b)(1); 42 USC 300x-9(c)(1); 42 USC 300x-22(b)(1)(C); 42 USC 300x-30(a); 2 CFR 200.303 The Mental Health Block Grant and Substance Abuse Block Grant are subject to various Maintenance of Effort and Earmarking requirements. These requirements ensure the department meets minimum expenditure thresholds. Federal regulations require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Based on auditor recalculations, we determined the department was in compliance with the applicable Maintenance of Effort and Earmarking requirements during state fiscal year 2022. However, we noted the following control weaknesses in the department?s calculations and demonstration of their compliance with the requirements: ? The department is required to expend 10% of the federal award for early serious mental illness and a first episode psychosis treatment services under the Mental Health Block Grant. The 10% set aside is calculated and budgeted when federal awards are granted. However, tracking of expenditures is not performed to ensure compliance is achieved. ? The department is required to maintain state expenditures for community mental health services and authorized substance abuse activities at a level not less than the average expenditures of the prior two state fiscal years. The department is also required to ensure expenditures for systems of integrated services for children with serious emotional disturbance and substance abuse treatment for pregnant women and women with dependent children is not less than the amount expended for these services in fiscal year 1994. The applicable expenditures were not consistently or accurately calculated by the department in each of the state fiscal years included in the Maintenance of Effort determinations. Additionally, no written procedures exist for the calculations. The department is at risk of noncompliance without controls in place to help ensure expenditures are tracked and calculations are consistently applied across fiscal years. We recommend department management implement controls to ensure applicable expenditures are adequately tracked and calculations applicable to the maintenance of effort requirements are consistently performed across fiscal years. We further recommend department management work with the federal awarding agency to submit corrected maintenance of effort totals to ensure appropriateness of future maintenance of effort determinations.
2022-045 Oregon Health Authority Submit required FFATA reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements; 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases; 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.268: 5 NH23IP922626; 6 NH23IP922626; 93.323: 6 NU50CK000541; 93.958: 1B09SM083823, 2021; 93.959: 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department?s subawards subject to FFATA reporting during the audit period. We determined: ? Five of 30 Mental Health Block Grant (MHBG) subawards were not reported, totaling $4.2 million in obligations. ? 12 of 65 Substance Abuse Block Grant (SABG) subawards were not reported, totaling $6.2 million in obligations. ? Four of 37 Epidemiology and Laboratory Capacity (ELC) subawards were not reported, totaling almost $55.5 million in obligations. ? Five of 39 Immunization Cooperative Agreements subawards were not reported, totaling $6.3 million in obligations. Of the total not reported, one SABG, one ELC, and two Immunization subawards were not reported in the FSRS due to oversights in the department?s reporting process. The remaining unreported subawards resulted from the department?s suspension of FFATA reporting stemming from the federal replacement of the DUNS number with the Unique Entity Identifier (UEI) in May 2022. The department did not have UEI numbers for all subrecipients at the time of the replacement which prevented the department from submitting accurate reports. FFATA reporting was suspended through the end of state fiscal year 2022 and into the following state fiscal year. Although the department suspended FFATA reporting in the FSRS, a tracking spreadsheet was maintained that included all subaward award information needed for reporting once reporting is resumed. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management implement controls to ensure all subawards are appropriately tracked and reported.
2022-046 Oregon Health Authority Ensure cash draws are made only for immediate cash needs Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 6B08TI083472, 2021 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 31 CFR 205.33 The Substance Abuse Block Grant is subject to federal cash management requirements. Federal regulations require the state minimize the time between the drawdown and disbursement of federal funds. The department?s normal draw procedure for the block grant is designed to request federal funds on a reimbursement basis. The amount to be drawn is calculated based on a comparison between previously drawn revenue amounts and program expenditures at the time of the draw. During our testing of a sample of three of the 15 cash draws performed during state fiscal year 2022, we identified an error in the calculation of a draw performed in April 2022 for the 2021 award. The process used to identify program revenues and expenditures for the draw calculation was incorrectly updated when the department transitioned to a new data analysis tool. As a result, the April 2022 draw requested $1 million in federal funds in excess of actual expenditures. The error in the query was not identified by the department through the end of the fiscal year. The total drawn on the award at the end of state fiscal year 2022 was in excess of expenditures by $847 thousand. Although the 2021 award was drawn in excess of expenditures at times after April 2022, the total revenues and expenditures were balanced at the close out of the award in December 2022. Additionally, according to Federal regulations no interest liability is incurred even though the draws were in excess of the immediate cash needs of operating the program. We recommend management ensure controls over the draw process are designed and implemented to review and identify calculation errors.
2022-043 Oregon Health Authority Implement controls to ensure subrecipients are appropriately identified and monitored Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.331; 45 CFR 75.352(b); 45 CFR 75.352(d) Federal regulations require pass-through entities to determine if the recipients of disbursements of federal funds are subrecipients or contractors. The subrecipient and contractor determination will impact which federal compliance requirements recipients are subject to and how program expenditures are reported on the Schedule of Expenditures of Federal Awards (SEFA). For recipients meeting the definition of a subrecipient, federal regulations require pass-through entities to evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining appropriate subrecipient monitoring activities. Monitoring activities should be completed based on the results of the subrecipient?s determined risk to ensure subawards are used appropriately. We reviewed the department?s classification of a sample of eight of 40 Mental Health Block Grant (MHBG) and 11 of 76 Substance Abuse Block Grant (SABG) recipients of federal funds. We judgmentally selected an additional 11 MHBG and 30 SABG recipients for review after our review of the initial sample of recipients identified inconsistencies in the classification of recipients. Based on the following inconsistencies identified in our review, it is unclear if the department correctly classified recipients as subrecipients or contractors and the related expenditures are reported accordingly. As a result, the SEFA may incorrectly report pass-through or direct expenditures. ? One recipient of MHBG funds and 13 recipients of SABG funds were classified as contractors by the department; however, other recipients providing the same services were classified as subrecipients. As they were identified as contractors, a SEFA correction of $1.4 million was made to report as direct expenditures rather than pass-through expenditures. ? Three recipients of MHBG funds and one recipient of SABG funds were classified as subrecipients by the department, but it was unclear if each met the definition of a subrecipient. ? One recipient of MHBG funds was classified as a contractor and appeared to meet the definition of a contractor; however, payments made to this recipient were recorded as pass-through expenditures. A SEFA correction of $329 thousand was made to report as direct expenditures rather than pass-through expenditures. ? One recipient of SABG funds was classified as neither contractor nor subrecipient. A SEFA correction of $215 thousand was made to report as direct expenditures rather than pass-through expenditures. We also inquired of the department?s risk assessment and monitoring activities for subrecipients. Based on our inquiries, the department does not have a formal implemented process for performing risk assessments to determine appropriate monitoring activities. Moreover, the department has not implemented a formal process to ensure subrecipients comply with federal regulations, terms and conditions of the subaward, and that subaward performance goals are achieved. If subrecipient monitoring is not performed and documented, subawards could be used for unauthorized purposes and performance goals not met. We recommend department management ensure recipients of federal funds are appropriately identified as subrecipients or contractors and the corresponding disbursement of federal funds are appropriately reported as direct or pass-through expenditures. We further recommend department management comply with subrecipient monitoring requirements, develop and implement internal controls to ensure risk assessments are performed and documented for each subrecipient, and monitoring activities are completed and documented according to risk assessment results.
2022-044 Oregon Health Authority Implement a consistent methodology for calculation of maintenance of effort Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness Prior Year Finding: N/A Questioned Costs: N/A Criteria: 42 USC 300x-2(a)(1)(C); 42 USC 300x-4(b)(1); 42 USC 300x-9(c)(1); 42 USC 300x-22(b)(1)(C); 42 USC 300x-30(a); 2 CFR 200.303 The Mental Health Block Grant and Substance Abuse Block Grant are subject to various Maintenance of Effort and Earmarking requirements. These requirements ensure the department meets minimum expenditure thresholds. Federal regulations require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Based on auditor recalculations, we determined the department was in compliance with the applicable Maintenance of Effort and Earmarking requirements during state fiscal year 2022. However, we noted the following control weaknesses in the department?s calculations and demonstration of their compliance with the requirements: ? The department is required to expend 10% of the federal award for early serious mental illness and a first episode psychosis treatment services under the Mental Health Block Grant. The 10% set aside is calculated and budgeted when federal awards are granted. However, tracking of expenditures is not performed to ensure compliance is achieved. ? The department is required to maintain state expenditures for community mental health services and authorized substance abuse activities at a level not less than the average expenditures of the prior two state fiscal years. The department is also required to ensure expenditures for systems of integrated services for children with serious emotional disturbance and substance abuse treatment for pregnant women and women with dependent children is not less than the amount expended for these services in fiscal year 1994. The applicable expenditures were not consistently or accurately calculated by the department in each of the state fiscal years included in the Maintenance of Effort determinations. Additionally, no written procedures exist for the calculations. The department is at risk of noncompliance without controls in place to help ensure expenditures are tracked and calculations are consistently applied across fiscal years. We recommend department management implement controls to ensure applicable expenditures are adequately tracked and calculations applicable to the maintenance of effort requirements are consistently performed across fiscal years. We further recommend department management work with the federal awarding agency to submit corrected maintenance of effort totals to ensure appropriateness of future maintenance of effort determinations.
2022-045 Oregon Health Authority Submit required FFATA reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements; 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases; 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.268: 5 NH23IP922626; 6 NH23IP922626; 93.323: 6 NU50CK000541; 93.958: 1B09SM083823, 2021; 93.959: 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department?s subawards subject to FFATA reporting during the audit period. We determined: ? Five of 30 Mental Health Block Grant (MHBG) subawards were not reported, totaling $4.2 million in obligations. ? 12 of 65 Substance Abuse Block Grant (SABG) subawards were not reported, totaling $6.2 million in obligations. ? Four of 37 Epidemiology and Laboratory Capacity (ELC) subawards were not reported, totaling almost $55.5 million in obligations. ? Five of 39 Immunization Cooperative Agreements subawards were not reported, totaling $6.3 million in obligations. Of the total not reported, one SABG, one ELC, and two Immunization subawards were not reported in the FSRS due to oversights in the department?s reporting process. The remaining unreported subawards resulted from the department?s suspension of FFATA reporting stemming from the federal replacement of the DUNS number with the Unique Entity Identifier (UEI) in May 2022. The department did not have UEI numbers for all subrecipients at the time of the replacement which prevented the department from submitting accurate reports. FFATA reporting was suspended through the end of state fiscal year 2022 and into the following state fiscal year. Although the department suspended FFATA reporting in the FSRS, a tracking spreadsheet was maintained that included all subaward award information needed for reporting once reporting is resumed. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management implement controls to ensure all subawards are appropriately tracked and reported.
2022-046 Oregon Health Authority Ensure cash draws are made only for immediate cash needs Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 6B08TI083472, 2021 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 31 CFR 205.33 The Substance Abuse Block Grant is subject to federal cash management requirements. Federal regulations require the state minimize the time between the drawdown and disbursement of federal funds. The department?s normal draw procedure for the block grant is designed to request federal funds on a reimbursement basis. The amount to be drawn is calculated based on a comparison between previously drawn revenue amounts and program expenditures at the time of the draw. During our testing of a sample of three of the 15 cash draws performed during state fiscal year 2022, we identified an error in the calculation of a draw performed in April 2022 for the 2021 award. The process used to identify program revenues and expenditures for the draw calculation was incorrectly updated when the department transitioned to a new data analysis tool. As a result, the April 2022 draw requested $1 million in federal funds in excess of actual expenditures. The error in the query was not identified by the department through the end of the fiscal year. The total drawn on the award at the end of state fiscal year 2022 was in excess of expenditures by $847 thousand. Although the 2021 award was drawn in excess of expenditures at times after April 2022, the total revenues and expenditures were balanced at the close out of the award in December 2022. Additionally, according to Federal regulations no interest liability is incurred even though the draws were in excess of the immediate cash needs of operating the program. We recommend management ensure controls over the draw process are designed and implemented to review and identify calculation errors.
2022-054 Department of Human Services/Oregon Health Authority Improve controls over payments for Medicaid clients Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.1(1); 2 CFR 200.400(a); 2 CFR 200.404; 42 CFR ? 433.32(a) Federal regulations only allow the Medicaid program to charge allowable program expenditures at the federal financial participation rate for various program costs at the time of payment for services provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to service providers through the Jsystems system. We randomly sampled 61 clients and one Medicaid service payment associated with each client using a statistically valid sample. We reviewed agency documentation to test compliance with the Activities Allowed or Unallowed & Allowable Cost requirements. For 1 client, we found the issues described below. ? The claim selected as our sample item did not have mileage accurately calculated, which resulted in an overpayment. Further review of payments for this client identified additional inaccurate payments during the fiscal year for mileage to this provider. Questioned costs identified for our sample item resulted in an overpayment of $6.00 and other identified questioned costs resulted in an underpayment of ($5.27). The above issues occurred due to human error when entering mileage into the state payment system from the home care worker mileage tracking software (OR-PTC), which lead to improper payments. Phase 1 of the OR-PTC system was implemented in September of 2021. During this phase of the implementation branches must run a report of mileage claims and enter these claims manually into the payment system. Due to the exceptions noted above, we reviewed all clients within our sample for the fiscal year which had mileage entered into the OR-PTC system and identified multiple additional underpayments and overpayments that resulted in an overall underpayment of ($49.07). Due to the systemic nature of this issue, we are unable to reasonably estimate or quantify remaining potential questioned costs outside of our sample population. We recommend department and authority management strengthen controls over the OR-PTC system to ensure transactions are adequately supported and reviewed.
2022-055 Department of Human Services/Oregon Health Authority Strengthen review over direct costs charged to the program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,942 (known) Criteria: 2 CFR 200.1(1); 2 CFR 200.400(a); 2 CFR 200.404; 42 CFR ? 433.32(a) Federal regulations only allow the Medicaid program to charge allowable program expenditures at the federal financial participation rate for various program costs at the time of payment for services provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to vendors other than providers through the state?s accounting system. We judgmentally selected payments to 28 vendors for our review. We identified the following 2 errors, which were not identified during their review process, that resulted in improper payment of Medicaid expenditures: ? Payments to one vendor charged expenditures related to a specific project unrelated to the Medicaid program, resulting in known federally funded questioned costs of $1,361. ? For one payment management was unable to provide a contract or support for bids collected for the project charged to the Medicaid program, resulting in known federally funded questioned costs of $46,581. The above issues occurred due to human error and inadequate record maintenance which could lead to unallowed activities/costs being charged to the Medicaid program. We recommend department and authority management strengthen controls over review to ensure transactions are adequately supported and reviewed. Additionally, we recommend the authority reimburse the federal agency for unallowable costs.
2022-056 Department of Human Services/Oregon Health Authority Return questioned costs related to 2019-014 audit finding Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 1805OR5MAP, 2018; 1805OR5ADM, 2018; 1905OR5MAP, 2019; 1905OR5ADM, 2019 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Noncompliance Prior Year Finding: 2019-014 Questioned Costs: $348,080 (known) Criteria: 42 CFR 433.32(a); 42 CFR 433.312(a); 42 CFR 447.45(f)(1)(iv) During our testing for the fiscal year 2019 we noted that the MMIS data tables did not agree to the rates established by CMS for 2 procedures codes. Using incorrect rates resulted in an overpayment of $348,080 to providers. This overpayment was first reported in the fiscal year-end June 30, 2019, Secretary of State audit report number 2020-14, finding number 2019-014. As of January 1, 2020, management updated the MMIS data tables to ensure all future provider payments were made at the correct rate. Additionally, management updated control procedures to ensure MMIS data tables are updated timely and accurately. However, as of May 1, 2023, the overpayment to providers has not been collected, federal funds have not been returned, and the planned repayment method has not been approved by CMS. Per authority management they plan to let these overpayments run through their cost settlement process which would be an unusual method to return federal funds. We recommend authority management reimburse the federal agency for unallowable costs.
2022-057 Department of Human Services/Oregon Health Authority Improve documentation for provider eligibility determinations and revalidations Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Special Tests and Provisions Type of Finding: Significant Deficiency Prior Year Finding: 2021-020 Questioned Costs: N/A Criteria: 42 CFR 455.436; 42 CFR 455.102 to 455.107; 42 CFR 455.414 Provider eligibility requirements for the Medicaid program differ depending upon the type of services provided; however, all providers are subject to specified database checks and are required to sign an adherence to federal regulations agreement (agreement). Typically, the agreement includes disclosures specifically required by federal regulations. Additionally, the federal regulations require that the Oregon Health Authority (authority) and Department of Human Services (department) determine eligibility for Medicaid providers and revalidate providers at least every five years by performing database checks to ensure providers are still eligible to participate in the Medicaid program. We selected a random sample of 62 providers in the Medicaid program with 32 providers enrolled by the authority and 30 enrolled by the department. For 4 providers we found the issues described below. ? I-9 form for 1 department provider could not be located. This provider is not currently a provider with the State and an updated I-9 will not be obtained. Based on our review of other available support we were able to determine this to be an eligible provider during the fiscal year. ? I-9 form for 1 department provider could not be located. The department has since obtained a completed I-9 form. ? I-9 forms for 2 department providers did not include a review of minimum acceptable documents to verify identity and employment authorization. The department is actively working to obtain missing documentation and based on our review of other available support we were able to determine these to be eligible providers during the fiscal year. The above issues occurred due to human error and inadequate record maintenance which could lead to ineligible providers receiving Medicaid funding. We recommend department management strengthen controls to ensure documentation supporting a provider?s eligibility determination and revalidation is complete.
2022-054 Department of Human Services/Oregon Health Authority Improve controls over payments for Medicaid clients Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.1(1); 2 CFR 200.400(a); 2 CFR 200.404; 42 CFR ? 433.32(a) Federal regulations only allow the Medicaid program to charge allowable program expenditures at the federal financial participation rate for various program costs at the time of payment for services provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to service providers through the Jsystems system. We randomly sampled 61 clients and one Medicaid service payment associated with each client using a statistically valid sample. We reviewed agency documentation to test compliance with the Activities Allowed or Unallowed & Allowable Cost requirements. For 1 client, we found the issues described below. ? The claim selected as our sample item did not have mileage accurately calculated, which resulted in an overpayment. Further review of payments for this client identified additional inaccurate payments during the fiscal year for mileage to this provider. Questioned costs identified for our sample item resulted in an overpayment of $6.00 and other identified questioned costs resulted in an underpayment of ($5.27). The above issues occurred due to human error when entering mileage into the state payment system from the home care worker mileage tracking software (OR-PTC), which lead to improper payments. Phase 1 of the OR-PTC system was implemented in September of 2021. During this phase of the implementation branches must run a report of mileage claims and enter these claims manually into the payment system. Due to the exceptions noted above, we reviewed all clients within our sample for the fiscal year which had mileage entered into the OR-PTC system and identified multiple additional underpayments and overpayments that resulted in an overall underpayment of ($49.07). Due to the systemic nature of this issue, we are unable to reasonably estimate or quantify remaining potential questioned costs outside of our sample population. We recommend department and authority management strengthen controls over the OR-PTC system to ensure transactions are adequately supported and reviewed.
2022-055 Department of Human Services/Oregon Health Authority Strengthen review over direct costs charged to the program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,942 (known) Criteria: 2 CFR 200.1(1); 2 CFR 200.400(a); 2 CFR 200.404; 42 CFR ? 433.32(a) Federal regulations only allow the Medicaid program to charge allowable program expenditures at the federal financial participation rate for various program costs at the time of payment for services provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to vendors other than providers through the state?s accounting system. We judgmentally selected payments to 28 vendors for our review. We identified the following 2 errors, which were not identified during their review process, that resulted in improper payment of Medicaid expenditures: ? Payments to one vendor charged expenditures related to a specific project unrelated to the Medicaid program, resulting in known federally funded questioned costs of $1,361. ? For one payment management was unable to provide a contract or support for bids collected for the project charged to the Medicaid program, resulting in known federally funded questioned costs of $46,581. The above issues occurred due to human error and inadequate record maintenance which could lead to unallowed activities/costs being charged to the Medicaid program. We recommend department and authority management strengthen controls over review to ensure transactions are adequately supported and reviewed. Additionally, we recommend the authority reimburse the federal agency for unallowable costs.
2022-056 Department of Human Services/Oregon Health Authority Return questioned costs related to 2019-014 audit finding Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 1805OR5MAP, 2018; 1805OR5ADM, 2018; 1905OR5MAP, 2019; 1905OR5ADM, 2019 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Noncompliance Prior Year Finding: 2019-014 Questioned Costs: $348,080 (known) Criteria: 42 CFR 433.32(a); 42 CFR 433.312(a); 42 CFR 447.45(f)(1)(iv) During our testing for the fiscal year 2019 we noted that the MMIS data tables did not agree to the rates established by CMS for 2 procedures codes. Using incorrect rates resulted in an overpayment of $348,080 to providers. This overpayment was first reported in the fiscal year-end June 30, 2019, Secretary of State audit report number 2020-14, finding number 2019-014. As of January 1, 2020, management updated the MMIS data tables to ensure all future provider payments were made at the correct rate. Additionally, management updated control procedures to ensure MMIS data tables are updated timely and accurately. However, as of May 1, 2023, the overpayment to providers has not been collected, federal funds have not been returned, and the planned repayment method has not been approved by CMS. Per authority management they plan to let these overpayments run through their cost settlement process which would be an unusual method to return federal funds. We recommend authority management reimburse the federal agency for unallowable costs.
2022-057 Department of Human Services/Oregon Health Authority Improve documentation for provider eligibility determinations and revalidations Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Special Tests and Provisions Type of Finding: Significant Deficiency Prior Year Finding: 2021-020 Questioned Costs: N/A Criteria: 42 CFR 455.436; 42 CFR 455.102 to 455.107; 42 CFR 455.414 Provider eligibility requirements for the Medicaid program differ depending upon the type of services provided; however, all providers are subject to specified database checks and are required to sign an adherence to federal regulations agreement (agreement). Typically, the agreement includes disclosures specifically required by federal regulations. Additionally, the federal regulations require that the Oregon Health Authority (authority) and Department of Human Services (department) determine eligibility for Medicaid providers and revalidate providers at least every five years by performing database checks to ensure providers are still eligible to participate in the Medicaid program. We selected a random sample of 62 providers in the Medicaid program with 32 providers enrolled by the authority and 30 enrolled by the department. For 4 providers we found the issues described below. ? I-9 form for 1 department provider could not be located. This provider is not currently a provider with the State and an updated I-9 will not be obtained. Based on our review of other available support we were able to determine this to be an eligible provider during the fiscal year. ? I-9 form for 1 department provider could not be located. The department has since obtained a completed I-9 form. ? I-9 forms for 2 department providers did not include a review of minimum acceptable documents to verify identity and employment authorization. The department is actively working to obtain missing documentation and based on our review of other available support we were able to determine these to be eligible providers during the fiscal year. The above issues occurred due to human error and inadequate record maintenance which could lead to ineligible providers receiving Medicaid funding. We recommend department management strengthen controls to ensure documentation supporting a provider?s eligibility determination and revalidation is complete.
2022-059 Department of Human Services Ensure issued benefits are accurate Federal Awarding Agency: U.S. Department of Agriculture Assistance Listing Number and Name: 10.542 Pandemic EBT Food Benefits (COVID-19) Federal Award Numbers and Years: Not available (COVID-19) Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $3,692,215 (known); $13,554,666 (likely) (COVID-19) Criteria: Public Law 116-127; 2 CFR 200.303 The federal requirements for the Pandemic EBT (P-EBT) program require state agencies follow their approved state plan. Part of Oregon?s simplifying assumptions in their state plan was that the benefit amount was determined at the school level, not the individual level, based on the school?s operating status, for October 2020 ? May 2021. As part of Oregon?s Ready Schools, Safe Learners program, schools were required to weekly report their operating status/instructional model to the Oregon Department of Education (ODE). In fiscal year 2022, the Department of Human Services (department) paid retroactive P-EBT benefits for children related to the 2020-2021 school year. This sample population consisted of institutions (schools and other educational facilities) and months in which children at the institutions received benefits, totaling $391 million. We selected a random sample of 40 institutions and a random month to determine if the benefits provided to the children, based on the status reported by the institution, were accurate. We identified 4 institutions, for April/May, where the benefit paid status of the institution was not the same as reported by the institution to ODE. In all 4 cases, the benefits paid were at a higher level resulting in questioned costs of $38,931 and likely questioned costs of $9.2 million. One of the simplifying assumptions for the P-EBT program, approved in Oregon?s state plan, was ?Oregon will have a limited reconsideration process to revisit benefit allotments at a school level.? However, the department allowed institutions to update their status without additional review, explanation, or documentation. The department could not provide the auditors any support for the changes made by the institutions. Furthermore, the Oregon Governor issued a directive to schools, on March 5, 2021, to begin a phased approach to require all public schools to provide in-person instruction through either a fully on-site or hybrid model on or before the week of April 19, 2021, for all schools. Although benefits issued continued to decrease as the school year end approached, in May 2021, 26% of the institution?s benefits paid were for fully virtual totaling $17 million. We judgmentally selected 36 institutions classified as fully virtual in May with benefits totaling $7.9 million. For 25 institutions, the benefit paid status did not agree to the status reported by the institution to ODE resulting in questioned costs of $3,653,284 and likely questioned costs of $4.4 million. We recommend DHS perform review to identify any additional discrepancies between benefits paid and the institutions reported status, to determine if payments were appropriate, and communicate with the federal awarding agency to determine if repayment is necessary.
2022-018 Oregon Housing and Community Services Controls are needed to ensure program expenditures are allowable Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: $245,362 (known) (COVID-19) Criteria: 24 CFR 576.100; CPD-21-08 III.E.3 Emergency Solutions Grants-Cares Act (ESG-CV) funds may be used for the five regular Emergency Solutions Grants (ESG) program components, as well as administrative activities: street outreach, emergency shelter, homelessness prevention, rapid re-housing, and homeless management information systems (HMIS). They may also be used for additional activities including, but not limited to, temporary emergency shelter, hazard pay, handwashing stations, cell phones and internet, personal protective equipment, and laundry. The funds are disbursed to the subrecipients after reimbursement requests are submitted.? Federal funds totaling $31,894,565 were distributed to 44 subrecipients during fiscal year 2022. We randomly selected 61 individual distributions made by the department to subrecipients. Subsequently, we randomly selected an expenditure from each disbursement request and then judgmentally selected additional expenditures from select disbursements. While gaining an understanding of the department?s internal control process, we learned the review process for subrecipient disbursement requests did not include a detailed verification that underlying expenditures were for allowable activities and costs. Given the department?s incomplete review process, we were unable to verify compliance by testing those reviews. The department requested supporting documentation from the subrecipients, documentation that should have been reviewed and retained by the department, for the required audit procedures to be performed. Our audit procedures were performed in three stages. First, we randomly selected 61 individual distributions made by the department to subrecipients, totaling $5,580,560. These disbursements generally consisted of reimbursement for multiple expenditures made by a subrecipient. Next, we asked the department to request a listing of expenditures from the subrecipients related to those disbursements. Finally, if provided, we agreed the listings to the disbursement and randomly and judgmentally selected individual expenditures from the listings for testing. We were unable to perform any review of 20 disbursements either because we did not receive a listing of the subrecipient?s expenditures, or the listing did not agree to the disbursement selected for testing. These disbursements related to 10 of the 44?subrecipients receiving funds in fiscal year 2022 and $1,475,345 of the $5,580,560 in disbursements selected for testing noted above. From the expenditure listings we did receive, we randomly and judgmentally selected individual expenditures to determine whether the supporting documentation agreed to the amount requested for reimbursement by the subrecipient. Of those 41 individual transactions selected for testing, there was inadequate or no supporting documentation provided for 29 items, and one instance where the request exceeded the support. These exceptions resulted in total questioned costs of $245,362. If requests for funds are not supported by documented expenditures, the department could be unknowingly reimbursing subrecipients for unallowable costs and activities. We recommend management implement internal controls to ensure subrecipient reimbursements are for allowable expenditures.
2022-019 Oregon Housing and Community Services Controls are needed to ensure subrecipients? compliance with equipment and real property requirements Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Equipment and Real Property Management Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.311; 2 CFR 200.313 There are specific requirements when equipment is purchased using federal funds and in use. At a minimum, procedures for managing equipment must meet the following requirements: ? Property records must be maintained that include key details (e.g. property description, ID number, Title, etc); ? A physical inventory of the property must be taken, and the results reconciled with the property records at least once every two years; ? A control system must be developed to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated; and ? Adequate maintenance procedures must be developed to keep the property in good condition. Real property purchased must be used for the originally authorized purpose as long as needed for that purpose. When real property is no longer needed for the originally authorized purpose, the non-federal entity must obtain disposition instructions from either the federal awarding agency or pass through entity. During our review, we determined OHCS was not monitoring its subrecipients to ensure the equipment and real property requirements were being met. Because subrecipients were not being monitored, we were unable to determine if there was a population of equipment and real property on which to perform our audit testing procedure. As a result, the department may not be in compliance with federal equipment and real property requirements. We recommend department management develop internal controls to ensure compliance with federal requirements for equipment and real property.
2022-020 Oregon Housing and Community Services Controls are needed to ensure buildings renovated for use as emergency homeless shelters are maintained as shelters for the period required Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Special Tests and Provisions Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 24 CFR 576.102(c) Federal regulations require that buildings renovated with ESG-CV funds for use as emergency homeless shelters must be maintained as shelters for not less than a period of 3 or 10 years, depending on the type of renovation and value of the building. Initial inquiries with program staff determined that the department was not aware whether its subrecipients were using program funds to renovate buildings for use as emergency homeless shelters. Subsequently, program staff indicated the information may be contained in subrecipient implementation reports. However, there were no known procedures or processes in place to monitor the use of funds during the fiscal period. Therefore, it is possible buildings renovated with program funds may not be maintained as emergency shelters for the minimum required time period. We recommend agency management develop internal controls to ensure buildings renovated for use as emergency homeless shelters are maintained as shelters for the period required.
2022-021 Oregon Housing and Community Services Controls are needed to ensure compliance with level of effort requirements Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 24 CFR 576.101(c) When a subrecipient is a unit of general-purpose local government, its ESG-CV program funds may not be used to replace funds the local government provided for street outreach and emergency shelter services during the preceding 12-month period unless U.S. Dept. of Housing and Urban Development determines the local government is in a severe financial deficit. ESG-CV funds should be used to supplement, not replace those funds. We determined the department was not monitoring its subrecipients for compliance with level of effort requirements during our review. Documentation was not available for review, and we were unable to determine the department?s compliance with this requirement. As a result, local governments could be using program funds to replace their funding allocated to street outreach and emergency shelter services. We recommend department management develop procedures to ensure compliance with federal requirements for level of effort and maintain documentation.
2022-022 Oregon Housing and Community Services Documentation verifying subrecipients have not been suspended or debarred needs to be retained Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 180.300; 2 CFR 180.305 Federal regulations require the department verify subrecipients are not suspended or debarred from receiving federal funds prior to making any disbursements. We randomly selected a sample of 14 subrecipients to verify whether they were federally suspended or debarred and determine whether the department performed a verification prior to disbursing program funds. Department management stated subrecipients? suspension/debarment status was reviewed in the federal database but was unable to provide documentation demonstrating the review was performed. Without performing this verification, the department could unknowingly pass federal funds to a subrecipient that has been federally suspended or debarred. Our independent verification confirmed the 14 subrecipients selected for testing were not suspended or debarred. We recommend department management maintain documentation demonstrating subrecipients have not been suspended or debarred.
2022-023 Oregon Housing and Community Services Controls need to be strengthened to ensure the required expenditures are spent timely Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Special Tests and Provisions Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: CPD 21-08(III)(B)(2)(c) Emergency Solutions Grants-Cares Act (ESG-CV) funds were intended to be spent quickly on allowable activities to address the public health and economic crisis stemming from COVID-19. At least 20% of the total award was to be spent by September 30, 2021. Based on our testing, the department was not adequately tracking the percentage or timeliness of expenditures and did not reach the expenditure milestone. Approximately 18% of the total award was expended by September 30, 2021. If the 20% milestone is not achieved, HUD is able to recapture up to 20%, or $11.2 million, of the total award. We recommend agency management develop procedures to ensure grant expenditures are adequately tracked and spent within the required time period.
2022-024 Oregon Housing and Community Services Subrecipients need to be monitored to ensure compliance with procurement standards Federal Awarding Agency: U.S. Department of Housing and Urban Development Assistance Listing Number and Name: 14.231 Emergency Solutions Grants Program (COVID-19) Federal Award Numbers and Years: E-20-DW-41-0001, 2020 (COVID-19) Compliance Requirement: Procurement, and Suspension and Debarment Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.317 - .327; 2 CFR 200.332(d) Federal regulations state that non-federal entities, including subrecipients, are required to have and use procurement procedures consistent with state and local laws and regulations and that conform to the federal procurement standards identified in 2 CFR 200.317 - .327. Pass-through entities, like the department, are required to monitor subrecipients for compliance with federal regulations and the terms and conditions of the award. Inquiries and testing determined the department?s fiscal monitoring procedures, which normally include review of compliance with procurement standards, were not fully performed during the fiscal year and only 6 of 45 subrecipients were reviewed. As a result, subrecipients could be out of compliance with procurement requirements. We recommend the department ensure subrecipients are monitored for compliance with procurement requirements.
2022-060 Higher Education Coordinating Commission Strengthen controls to ensure expenditures are not obligated beyond the period of performance Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA32218F30, 2018; AA32218G10, 2018; AA32218G30, 2018; AA32218G70, 2018; AA32218H90, 2018; AA32218F31, 2018 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,523 (known) Criteria: 20 CFR 683.110; 2 CFR 200.343 (2018) WIOA grants are available for expenditure by the State during the grant program year and the two succeeding program years. In addition, the State must liquidate all financial obligations incurred no later than 90 calendar days after the end date of the period of performance. We judgmentally selected for review expenditures recorded in fiscal year 2022 related to 2018 grant award whose period of performance ended June 30, 2021. Our review of the supporting documentation found there were 3 out of 13 items with expenditures that were outside the period of performance. Total question cost for these expenditures were $47,523. Per management, these errors were due to a change in personnel and trying to balance out the 2018 grant after the fact. We recommend department management review and revise controls to ensure expenditures are only obligated during the period of performance federally mandated dates.
2022-061 Higher Education Coordinating Commission FFATA reports were not prepared or submitted Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Worker Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0; 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The WIOA Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). FFATA requires the department to submit information for any subaward action that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Upon inquiry of the department, we determined it had not submitted any subaward information to the FSRS during fiscal year 2022. Department management stated FFATA reporting was not completed due to staff turnover. We also reviewed information the department had submitted at USAspending.gov and determined the department had not submitted any subaward information to FSRS since 2017. The agency is not in compliance with FFATA reporting requirements. Additionally, the department is not transparent in the spending decisions of these federal awards. We recommend department management implement controls to timely prepare and submit the monthly FFATA reports as required by federal regulations. The department should also work with the federal awarding agency to determine what actions it should take for older reports not submitted.
2022-062 Higher Education Coordinating Commission Improve controls over payroll Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0, 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 Federal regulations require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department has implemented the following procedures to ensure payroll costs are correctly charged to the program. Managers approve monthly timesheets submitted by the employees in the state?s payroll system. When managers do not approve by a specified date, the payroll system will automatically approve the timesheet, shown with the words ?system approved.? Additionally, each employee should have a signed position description, which details the duties of the position and the amount of time to be charged for the duties. We selected a nonstatistical random sample of 20 employee timesheets related to 12 employees to ensure payroll was appropriately charged to the program. Additionally, we selected one employee who was on job rotation with the agency from January 2022 through June 2022. We verified payroll timesheets were reviewed by a manager and signed position descriptions were retained per state guidelines, and identified the following exceptions: ? Two timesheets for one employee did not have evidence of manager approval and 2 timesheets for two employees were reviewed over three months later. ? For all 12 employees, the position descriptions provided were unsigned or signed upon our request. We did not question these costs as department management verified job duties were appropriate to the program. ? For the employee on job rotation, 4 of the 6 timesheets were not reviewed and a signed position description was not signed by the employee. According to department management, timesheets were not always approved by the manager as the system will automatically lock and approve the timesheet. For position descriptions, supervisor did not always follow through on obtaining signed position descriptions and for longer term employees a number of boxes could not be located when the agency moved. There is a risk that employees could be improperly charging to the federal program. We recommend department management ensure timesheets are timely reviewed and positions descriptions are completed and retained.
2022-060 Higher Education Coordinating Commission Strengthen controls to ensure expenditures are not obligated beyond the period of performance Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA32218F30, 2018; AA32218G10, 2018; AA32218G30, 2018; AA32218G70, 2018; AA32218H90, 2018; AA32218F31, 2018 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,523 (known) Criteria: 20 CFR 683.110; 2 CFR 200.343 (2018) WIOA grants are available for expenditure by the State during the grant program year and the two succeeding program years. In addition, the State must liquidate all financial obligations incurred no later than 90 calendar days after the end date of the period of performance. We judgmentally selected for review expenditures recorded in fiscal year 2022 related to 2018 grant award whose period of performance ended June 30, 2021. Our review of the supporting documentation found there were 3 out of 13 items with expenditures that were outside the period of performance. Total question cost for these expenditures were $47,523. Per management, these errors were due to a change in personnel and trying to balance out the 2018 grant after the fact. We recommend department management review and revise controls to ensure expenditures are only obligated during the period of performance federally mandated dates.
2022-061 Higher Education Coordinating Commission FFATA reports were not prepared or submitted Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Worker Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0; 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The WIOA Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). FFATA requires the department to submit information for any subaward action that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Upon inquiry of the department, we determined it had not submitted any subaward information to the FSRS during fiscal year 2022. Department management stated FFATA reporting was not completed due to staff turnover. We also reviewed information the department had submitted at USAspending.gov and determined the department had not submitted any subaward information to FSRS since 2017. The agency is not in compliance with FFATA reporting requirements. Additionally, the department is not transparent in the spending decisions of these federal awards. We recommend department management implement controls to timely prepare and submit the monthly FFATA reports as required by federal regulations. The department should also work with the federal awarding agency to determine what actions it should take for older reports not submitted.
2022-062 Higher Education Coordinating Commission Improve controls over payroll Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0, 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 Federal regulations require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department has implemented the following procedures to ensure payroll costs are correctly charged to the program. Managers approve monthly timesheets submitted by the employees in the state?s payroll system. When managers do not approve by a specified date, the payroll system will automatically approve the timesheet, shown with the words ?system approved.? Additionally, each employee should have a signed position description, which details the duties of the position and the amount of time to be charged for the duties. We selected a nonstatistical random sample of 20 employee timesheets related to 12 employees to ensure payroll was appropriately charged to the program. Additionally, we selected one employee who was on job rotation with the agency from January 2022 through June 2022. We verified payroll timesheets were reviewed by a manager and signed position descriptions were retained per state guidelines, and identified the following exceptions: ? Two timesheets for one employee did not have evidence of manager approval and 2 timesheets for two employees were reviewed over three months later. ? For all 12 employees, the position descriptions provided were unsigned or signed upon our request. We did not question these costs as department management verified job duties were appropriate to the program. ? For the employee on job rotation, 4 of the 6 timesheets were not reviewed and a signed position description was not signed by the employee. According to department management, timesheets were not always approved by the manager as the system will automatically lock and approve the timesheet. For position descriptions, supervisor did not always follow through on obtaining signed position descriptions and for longer term employees a number of boxes could not be located when the agency moved. There is a risk that employees could be improperly charging to the federal program. We recommend department management ensure timesheets are timely reviewed and positions descriptions are completed and retained.
2022-060 Higher Education Coordinating Commission Strengthen controls to ensure expenditures are not obligated beyond the period of performance Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA32218F30, 2018; AA32218G10, 2018; AA32218G30, 2018; AA32218G70, 2018; AA32218H90, 2018; AA32218F31, 2018 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,523 (known) Criteria: 20 CFR 683.110; 2 CFR 200.343 (2018) WIOA grants are available for expenditure by the State during the grant program year and the two succeeding program years. In addition, the State must liquidate all financial obligations incurred no later than 90 calendar days after the end date of the period of performance. We judgmentally selected for review expenditures recorded in fiscal year 2022 related to 2018 grant award whose period of performance ended June 30, 2021. Our review of the supporting documentation found there were 3 out of 13 items with expenditures that were outside the period of performance. Total question cost for these expenditures were $47,523. Per management, these errors were due to a change in personnel and trying to balance out the 2018 grant after the fact. We recommend department management review and revise controls to ensure expenditures are only obligated during the period of performance federally mandated dates.
2022-061 Higher Education Coordinating Commission FFATA reports were not prepared or submitted Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Worker Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0; 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The WIOA Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). FFATA requires the department to submit information for any subaward action that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Upon inquiry of the department, we determined it had not submitted any subaward information to the FSRS during fiscal year 2022. Department management stated FFATA reporting was not completed due to staff turnover. We also reviewed information the department had submitted at USAspending.gov and determined the department had not submitted any subaward information to FSRS since 2017. The agency is not in compliance with FFATA reporting requirements. Additionally, the department is not transparent in the spending decisions of these federal awards. We recommend department management implement controls to timely prepare and submit the monthly FFATA reports as required by federal regulations. The department should also work with the federal awarding agency to determine what actions it should take for older reports not submitted.
2022-062 Higher Education Coordinating Commission Improve controls over payroll Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0, 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 Federal regulations require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department has implemented the following procedures to ensure payroll costs are correctly charged to the program. Managers approve monthly timesheets submitted by the employees in the state?s payroll system. When managers do not approve by a specified date, the payroll system will automatically approve the timesheet, shown with the words ?system approved.? Additionally, each employee should have a signed position description, which details the duties of the position and the amount of time to be charged for the duties. We selected a nonstatistical random sample of 20 employee timesheets related to 12 employees to ensure payroll was appropriately charged to the program. Additionally, we selected one employee who was on job rotation with the agency from January 2022 through June 2022. We verified payroll timesheets were reviewed by a manager and signed position descriptions were retained per state guidelines, and identified the following exceptions: ? Two timesheets for one employee did not have evidence of manager approval and 2 timesheets for two employees were reviewed over three months later. ? For all 12 employees, the position descriptions provided were unsigned or signed upon our request. We did not question these costs as department management verified job duties were appropriate to the program. ? For the employee on job rotation, 4 of the 6 timesheets were not reviewed and a signed position description was not signed by the employee. According to department management, timesheets were not always approved by the manager as the system will automatically lock and approve the timesheet. For position descriptions, supervisor did not always follow through on obtaining signed position descriptions and for longer term employees a number of boxes could not be located when the agency moved. There is a risk that employees could be improperly charging to the federal program. We recommend department management ensure timesheets are timely reviewed and positions descriptions are completed and retained.
2022-060 Higher Education Coordinating Commission Strengthen controls to ensure expenditures are not obligated beyond the period of performance Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA32218F30, 2018; AA32218G10, 2018; AA32218G30, 2018; AA32218G70, 2018; AA32218H90, 2018; AA32218F31, 2018 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,523 (known) Criteria: 20 CFR 683.110; 2 CFR 200.343 (2018) WIOA grants are available for expenditure by the State during the grant program year and the two succeeding program years. In addition, the State must liquidate all financial obligations incurred no later than 90 calendar days after the end date of the period of performance. We judgmentally selected for review expenditures recorded in fiscal year 2022 related to 2018 grant award whose period of performance ended June 30, 2021. Our review of the supporting documentation found there were 3 out of 13 items with expenditures that were outside the period of performance. Total question cost for these expenditures were $47,523. Per management, these errors were due to a change in personnel and trying to balance out the 2018 grant after the fact. We recommend department management review and revise controls to ensure expenditures are only obligated during the period of performance federally mandated dates.
2022-061 Higher Education Coordinating Commission FFATA reports were not prepared or submitted Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Worker Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0; 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The WIOA Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). FFATA requires the department to submit information for any subaward action that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Upon inquiry of the department, we determined it had not submitted any subaward information to the FSRS during fiscal year 2022. Department management stated FFATA reporting was not completed due to staff turnover. We also reviewed information the department had submitted at USAspending.gov and determined the department had not submitted any subaward information to FSRS since 2017. The agency is not in compliance with FFATA reporting requirements. Additionally, the department is not transparent in the spending decisions of these federal awards. We recommend department management implement controls to timely prepare and submit the monthly FFATA reports as required by federal regulations. The department should also work with the federal awarding agency to determine what actions it should take for older reports not submitted.
2022-062 Higher Education Coordinating Commission Improve controls over payroll Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0, 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 Federal regulations require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department has implemented the following procedures to ensure payroll costs are correctly charged to the program. Managers approve monthly timesheets submitted by the employees in the state?s payroll system. When managers do not approve by a specified date, the payroll system will automatically approve the timesheet, shown with the words ?system approved.? Additionally, each employee should have a signed position description, which details the duties of the position and the amount of time to be charged for the duties. We selected a nonstatistical random sample of 20 employee timesheets related to 12 employees to ensure payroll was appropriately charged to the program. Additionally, we selected one employee who was on job rotation with the agency from January 2022 through June 2022. We verified payroll timesheets were reviewed by a manager and signed position descriptions were retained per state guidelines, and identified the following exceptions: ? Two timesheets for one employee did not have evidence of manager approval and 2 timesheets for two employees were reviewed over three months later. ? For all 12 employees, the position descriptions provided were unsigned or signed upon our request. We did not question these costs as department management verified job duties were appropriate to the program. ? For the employee on job rotation, 4 of the 6 timesheets were not reviewed and a signed position description was not signed by the employee. According to department management, timesheets were not always approved by the manager as the system will automatically lock and approve the timesheet. For position descriptions, supervisor did not always follow through on obtaining signed position descriptions and for longer term employees a number of boxes could not be located when the agency moved. There is a risk that employees could be improperly charging to the federal program. We recommend department management ensure timesheets are timely reviewed and positions descriptions are completed and retained.
2022-060 Higher Education Coordinating Commission Strengthen controls to ensure expenditures are not obligated beyond the period of performance Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program 17.259 WIOA Youth Activities 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA32218F30, 2018; AA32218G10, 2018; AA32218G30, 2018; AA32218G70, 2018; AA32218H90, 2018; AA32218F31, 2018 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,523 (known) Criteria: 20 CFR 683.110; 2 CFR 200.343 (2018) WIOA grants are available for expenditure by the State during the grant program year and the two succeeding program years. In addition, the State must liquidate all financial obligations incurred no later than 90 calendar days after the end date of the period of performance. We judgmentally selected for review expenditures recorded in fiscal year 2022 related to 2018 grant award whose period of performance ended June 30, 2021. Our review of the supporting documentation found there were 3 out of 13 items with expenditures that were outside the period of performance. Total question cost for these expenditures were $47,523. Per management, these errors were due to a change in personnel and trying to balance out the 2018 grant after the fact. We recommend department management review and revise controls to ensure expenditures are only obligated during the period of performance federally mandated dates.
2022-061 Higher Education Coordinating Commission FFATA reports were not prepared or submitted Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Worker Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0; 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170; 2 CFR 200.303 The WIOA Cluster is subject to subaward reporting under the Federal Funding Accountability and Transparency Act (FFATA). FFATA requires the department to submit information for any subaward action that equals or exceeds $30,000 in the FFATA Subaward Reporting System (FSRS). Reports should be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Upon inquiry of the department, we determined it had not submitted any subaward information to the FSRS during fiscal year 2022. Department management stated FFATA reporting was not completed due to staff turnover. We also reviewed information the department had submitted at USAspending.gov and determined the department had not submitted any subaward information to FSRS since 2017. The agency is not in compliance with FFATA reporting requirements. Additionally, the department is not transparent in the spending decisions of these federal awards. We recommend department management implement controls to timely prepare and submit the monthly FFATA reports as required by federal regulations. The department should also work with the federal awarding agency to determine what actions it should take for older reports not submitted.
2022-062 Higher Education Coordinating Commission Improve controls over payroll Federal Awarding Agency: U.S. Department of Labor Assistance Listing Number and Name: 17.258 WIOA Adult Program; 17.259 WIOA Youth Activities; 17.278 WIOA Dislocated Workers Formula Grant Federal Award Numbers and Years: AA33251LN0, 2019; AA33251L70, 2019; AA33251L90, 2019; AA33251R70, 2019; AA33251R90, 2019; AA34789VS0, 2020; AA34789V90, 2020; AA34789VQ0, 2020; AA347893L0, 2020; AA347895P0, 2020; AA36341E10, 2021; AA36341D90, 2021; AA36341DQ0, 2021; AA36341KY0, 2021; AA36341LA0, 2021 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 Federal regulations require recipients of federal awards to establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. The department has implemented the following procedures to ensure payroll costs are correctly charged to the program. Managers approve monthly timesheets submitted by the employees in the state?s payroll system. When managers do not approve by a specified date, the payroll system will automatically approve the timesheet, shown with the words ?system approved.? Additionally, each employee should have a signed position description, which details the duties of the position and the amount of time to be charged for the duties. We selected a nonstatistical random sample of 20 employee timesheets related to 12 employees to ensure payroll was appropriately charged to the program. Additionally, we selected one employee who was on job rotation with the agency from January 2022 through June 2022. We verified payroll timesheets were reviewed by a manager and signed position descriptions were retained per state guidelines, and identified the following exceptions: ? Two timesheets for one employee did not have evidence of manager approval and 2 timesheets for two employees were reviewed over three months later. ? For all 12 employees, the position descriptions provided were unsigned or signed upon our request. We did not question these costs as department management verified job duties were appropriate to the program. ? For the employee on job rotation, 4 of the 6 timesheets were not reviewed and a signed position description was not signed by the employee. According to department management, timesheets were not always approved by the manager as the system will automatically lock and approve the timesheet. For position descriptions, supervisor did not always follow through on obtaining signed position descriptions and for longer term employees a number of boxes could not be located when the agency moved. There is a risk that employees could be improperly charging to the federal program. We recommend department management ensure timesheets are timely reviewed and positions descriptions are completed and retained.
2022-063 Oregon Department of Transportation Consistency needed when providing required federal award information to subrecipients Federal Awarding Agency: U.S. Department of Transportation Assistance Listing Number and Name: 20.205 Highway Planning and Construction Federal Award Numbers and Years: Various Compliance Requirements: Subrecipient Monitoring Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332(a)(1) Federal regulations require pass-through entities to ensure every subaward is clearly identified to the subrecipient as a subaward and includes certain required information. We examined 17 subrecipient awards to ensure the information required under 2 CFR 200.332(a)(1) was communicated at the time of the subaward. Each award examined was missing one or more of the required elements: ? 15 samples did not include the subrecipient?s Unique Entity Identifier or DUNS number; ? 7 samples did not provide the Federal Award Identification Number (FAIN); ? 5 samples did not provide the Federal Award date; and ? 1 sample did not provide the correct assistance listing number. The required award information is necessary for the subrecipient to accurately report the subaward information in its accounting records and on the schedule of expenditure of federal awards. Procedures to communicate award information are not consistently followed across the department and as a result do not ensure that all the required award information is communicated. Specifically, some required information is included in the Federal Project Agreement from the Federal Management Information System (FMIS), but not all managers were aware it needed to be provided. In many cases an exhibit was included with the agreement that could have provided all the required information, but the exhibit was not completed. We recommend the department adopt procedures for preparing subaward agreements that ensure all required information is provided to subrecipients at the time of the subaward.
2022-064 Oregon Department of Transportation Management should ensure timely review of transfers is documented Federal Awarding Agency: U.S. Department of Transportation Assistance Listing Number and Name: 20.205 Highway Planning and Construction Federal Award Numbers and Years: Various Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303; GAO-17-704G ?10.03, 12.05; ODOT FASM 3.7 The department is responsible for establishing and maintaining internal controls to ensure entries posted in the accounting records are for costs and activities allowable under the federal program. Journal entry review and approval should be clearly documented and readily available for examination. The department has established Financial Administration Standard 3.7, Expenditure Journal Entries, which requires management to transmit signed hard copy supporting documentation of journal entries to financial services after they?ve been reviewed and approved. We tested 40 transfer journal entries moving costs between federal project sub jobs and found that 19 did not have documentation of timely approval. In two cases, approval was documented more than a year after costs were transferred. The 19 entries were all lump sum transfers processed by Program and Funding Services (P&FS). P&FS is authorized to process transfers, moving costs between sub jobs of the same project. These transfers are necessary to align project costs with the appropriate funding source. Per P&FS management, transfers are generally reviewed within a few days. However, documentation of the review has not been occurring until much later due to challenges associated with remote work and policies requiring hard copy documentation. Over $90 million in program costs were transferred between sub jobs in this manner during fiscal year 2022. Without timely review and documentation available to support transfers, unallowable costs or activities could be transferred and billed erroneously to the Federal government. We recommend management ensure procedures for review of transfer journal entries result in timely documented approvals.
2022-063 Oregon Department of Transportation Consistency needed when providing required federal award information to subrecipients Federal Awarding Agency: U.S. Department of Transportation Assistance Listing Number and Name: 20.205 Highway Planning and Construction Federal Award Numbers and Years: Various Compliance Requirements: Subrecipient Monitoring Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332(a)(1) Federal regulations require pass-through entities to ensure every subaward is clearly identified to the subrecipient as a subaward and includes certain required information. We examined 17 subrecipient awards to ensure the information required under 2 CFR 200.332(a)(1) was communicated at the time of the subaward. Each award examined was missing one or more of the required elements: ? 15 samples did not include the subrecipient?s Unique Entity Identifier or DUNS number; ? 7 samples did not provide the Federal Award Identification Number (FAIN); ? 5 samples did not provide the Federal Award date; and ? 1 sample did not provide the correct assistance listing number. The required award information is necessary for the subrecipient to accurately report the subaward information in its accounting records and on the schedule of expenditure of federal awards. Procedures to communicate award information are not consistently followed across the department and as a result do not ensure that all the required award information is communicated. Specifically, some required information is included in the Federal Project Agreement from the Federal Management Information System (FMIS), but not all managers were aware it needed to be provided. In many cases an exhibit was included with the agreement that could have provided all the required information, but the exhibit was not completed. We recommend the department adopt procedures for preparing subaward agreements that ensure all required information is provided to subrecipients at the time of the subaward.
2022-064 Oregon Department of Transportation Management should ensure timely review of transfers is documented Federal Awarding Agency: U.S. Department of Transportation Assistance Listing Number and Name: 20.205 Highway Planning and Construction Federal Award Numbers and Years: Various Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303; GAO-17-704G ?10.03, 12.05; ODOT FASM 3.7 The department is responsible for establishing and maintaining internal controls to ensure entries posted in the accounting records are for costs and activities allowable under the federal program. Journal entry review and approval should be clearly documented and readily available for examination. The department has established Financial Administration Standard 3.7, Expenditure Journal Entries, which requires management to transmit signed hard copy supporting documentation of journal entries to financial services after they?ve been reviewed and approved. We tested 40 transfer journal entries moving costs between federal project sub jobs and found that 19 did not have documentation of timely approval. In two cases, approval was documented more than a year after costs were transferred. The 19 entries were all lump sum transfers processed by Program and Funding Services (P&FS). P&FS is authorized to process transfers, moving costs between sub jobs of the same project. These transfers are necessary to align project costs with the appropriate funding source. Per P&FS management, transfers are generally reviewed within a few days. However, documentation of the review has not been occurring until much later due to challenges associated with remote work and policies requiring hard copy documentation. Over $90 million in program costs were transferred between sub jobs in this manner during fiscal year 2022. Without timely review and documentation available to support transfers, unallowable costs or activities could be transferred and billed erroneously to the Federal government. We recommend management ensure procedures for review of transfer journal entries result in timely documented approvals.
2022-025 Oregon Housing and Community Services Perform fiscal monitoring for subrecipients administrative expenditures to ensure compliance Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: $121,463 (known) (COVID-19) Criteria: 2 CFR 200.332(a)(5) and (d) Department management is responsible for monitoring the activities of subrecipients to ensure subawards are used for authorized purposes and in compliance with federal requirements. Additionally, department management is responsible for communicating to subrecipients that they are required to permit the department and auditors access to their records as necessary to ensure the department is in compliance with program requirements. The department passed through program funds to community action agencies (subrecipients) to provide program delivery, including administrative costs. The department performed fiscal monitoring for only five of their 18 subrecipients during the audit period due to staff turnover. Fiscal monitoring includes procedures to address compliance with activities allowed and allowable cost requirements for administrative costs. Due to the limited fiscal monitoring performed, auditors performed additional procedures at the subrecipient level to determine whether the department was compliant with program requirements. We tested a total of 82 transactions, 70 randomly selected and 12 judgmentally selected from the 13 subrecipients that did not receive subrecipient monitoring during the fiscal year. We noted the following: ? One subrecipient did not respond to audit requests for documentation, resulting in an inability to test four transactions totaling $4,114. ? One subrecipient did not provide sufficiently detailed documentation to determine whether 7 transactions were for accurate amounts totaling $117,349. Of those seven transactions, we were unable to determine whether two transactions were for allowable activities or appropriately categorized as administrative expenditures. Without adequate monitoring of subrecipients, the department?s ability to ensure compliance with program requirements is diminished. We recommend department management perform fiscal monitoring to ensure subrecipients are expending administrative funds in accordance with program requirements.
2022-026 Oregon Housing and Community Services Department Implement program monitoring over client assistance payments to ensure compliance Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021; ERA 2, 2021 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed; Eligibility Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: $21,624 (known); $11,067,350 (likely) (COVID-19) Criteria: 2 CFR 200.332(d); 2 CFR 200.501(g) Department management is responsible for monitoring the activities of subrecipients to ensure subawards are used for authorized purposes and are compliant with federal requirements. Additionally, department management is responsible for ensuring compliance when a contractor is responsible for program compliance or the contractor?s records must be reviewed to determine program compliance. The department provided $140 million and $46 million of phase one program funds to community action agencies (subrecipients) and a third-party vendor (contractor) to provide program delivery, respectively; and $132 million phase two program funds to only the contractor. Program delivery included determining client eligibility and making payments for direct client assistance for rent, utilities, internet, and other housing related costs. During implementation of the program, the department provided program manuals to the subrecipients and contractor. Due to the department?s limited staff, they focused on updating policies and procedures to address systemic issues identified; however, if a particularly challenging application required the department?s review, they were available to provide direct assistance. The department did not implement any predefined, systemic program monitoring of the subrecipients or contractor to ensure direct client assistance payments were paid to only eligible clients for only allowable and supported amounts. Therefore, auditors performed additional procedures at the subrecipient and contractor level to determine whether direct client assistance payments were paid to eligible clients for allowable activities. We tested a total of 62 randomly selected direct client assistance payments at 16 subrecipients totaling $183,515, and found the following: ? One subrecipient did not respond to audit requests for documentation, resulting in an inability to test one transaction in the amount of $360. ? One subrecipient did not obtain documentation to support that there was a lease agreement in place, resulting in questioned costs of $5,775. When extrapolated to the total population, these errors result in over $2.3 million in likely questioned costs. We tested 61 randomly selected contractor direct client assistance payments totaling $374,274, and found the following: ? One payment where an incorrect landlord was paid in the amount of $2,700. Attempts to recover the funds have been unsuccessful as of the date of the finding. ? Two payments where the rental amount was doubled, resulting in overpayments totaling $5,910. ? Seven payments where amounts already paid were not accurately reflected in the calculation of assistance provided, resulting in overpayments totaling $4,191. ? Three payments where amounts did not agree to supporting documentation, resulting in overpayments of $2,181. ? Three payments where there was insufficient documentation for amounts paid, resulting in overpayments of $432. ? One payment where costs were paid for the same household on alternate applications, resulting in an overpayment of $73. When extrapolated to the total population, these errors result in over $8.7 million in likely questioned costs. We recommend department management implement predefined, systemic program monitoring to ensure the subrecipients and contractor are administering program funds in accordance with program requirements.
2022-027 Oregon Housing and Community Services Ensure Monthly and Quarterly reports are accurate and adequately supported Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021 (COVID-19); ERA 2, 2021 (COVID-19) Compliance Requirement: Reporting Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.302(a) and (b)(3); 2 CFR 200.303(a), (c)-(d) Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance the department is managing, evaluating, and monitoring the federal award in compliance with the terms and conditions of the award and taking prompt action when instances of noncompliance are identified. Additionally, the department is responsible for maintaining records to allow for submission of reports that are accurate and adequately supported. We tested four randomly selected monthly reports and found one report did not accurately report the number of unique households assisted and the amount of the assistance based on the supporting documentation. The department stated the differences were likely due to a transition in subsystem reporting formats and delays in report processing. We tested four quarterly reports, two of which were randomly selected and two of which were judgmentally selected. We found one report where the cumulative obligation amount did not agree to supporting documentation and were not accurate, and one report where the cumulative obligation and cumulative expenditures amounts did not agree to supporting documentation and were not accurate. The department stated these errors were due to erroneously entered information in the federal awarding agency?s reporting portal. Information included in these reports is used by the federal awarding agency to determine whether the department qualifies for receiving reallocation payments, as well as how much of a reallocation would be awarded to the department. Errors in these reports could result in errors in the federal awarding agency?s determination of eligibility for funding, and/or the reallocation formula. We recommend department management update and correct erroneous reports and establish controls to ensure reported amounts are accurate and adequately supported.
2022-028 Oregon Housing and Community Services Ensure Federal Funding Accountability and Transparency Act reporting is completed Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021 (COVID-19); ERA 2, 2021 (COVID-19) Compliance Requirement: Reporting Type of Finding: Material Weakness, Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303(a), (c)-(d); 2 CFR 170, Appendix A I(a) Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance the department is managing, evaluating, and monitoring the federal award in compliance with the terms and conditions of the award and taking prompt action when instances of noncompliance are identified. The Federal Funding Accountability and Transparency Act (FFATA) requires the department to submit information for any subaward action that equals or exceeds $30,000. Program guidance required the department to report detailed subaward information directly to the federal awarding agency. This detailed subaward information encompassed all requirements related to FFATA, and the federal awarding agency gave the department the option of filing required FFATA reports on their behalf. The department stated they did not provide the detailed subaward information to the federal awarding agency to complete FFATA reporting on their behalf, and they did not complete any alternate FFATA submissions during the fiscal year due to grant award information not being available on the federal website to file their reports. As a result, the department is not in compliance with FFATA reporting requirements. We recommend department management ensure FFATA reporting is completed.
2022-029 Oregon Housing and Community Services Ensure accessible documentation to evidence compliance with program requirements Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Eligibility Type of Finding: Material Weakness Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.302(a); 2 CFR 200.332(a)(5) Department management is responsible for communicating to subrecipients that they are required to permit the department and auditors access to their records as necessary to ensure the department is compliant with program requirements. To ensure compliance with program requirements, subrecipient records must also be sufficiently detailed. The department passed through $140 million phase one program funds to community action agencies (subrecipients) to provide program delivery. The department performed limited fiscal monitoring during the audit period which included procedures to address compliance with activities allowed and allowable cost requirements for administrative costs. The department did not perform any program monitoring during the audit period which primarily addresses compliance with eligibility requirements. To determine whether the department complied with program requirements for the fiscal year, auditors attempted to reconcile detailed subrecipient ledgers with the intent of selecting and testing sample items at each individual subrecipient organization. We noted issues with two individual subrecipients, resulting in an inability to perform testing procedures over a total of $21,438,521 in program expenditures. For the first subrecipient we were able to reconcile their detailed ledgers to the department?s financial records, however their detailed ledger included pass-through payments to a third organization for program delivery. As a result of the combination of direct and pass-through payments, we were unable to obtain sufficiently detailed data that also reconciled to the department?s financial records to select individual transactions for testing. This subrecipient represents $19,877,962 of the unaudited expenditures. For the second subrecipient we were able to reconcile their detailed ledgers to the department?s financial records and select administrative and program transactions for testing. However, the subrecipient was unresponsive to documentation requests to substantiate expenditures. This subrecipient accounted for $1,560,559 of the unaudited expenditures. We recommend department management obtain and reconcile sufficiently detailed subrecipient ledgers and support to substantiate expenditures to allow for fiscal and program monitoring to ensure subrecipients are administering program funds in accordance with program requirements.
2022-030 Oregon Housing and Community Services Ensure controls over administrative expenditure limits are properly designed and sufficiently detailed to ensure compliance Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.023 Emergency Rental Assistance Program (COVID-19) Federal Award Numbers and Years: ERA 1, 2021 (COVID-19); ERA 2, 2021 (COVID-19) Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Material Weakness Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303(a), (c)-(d); 15 U.S.C. 9058a(c)(5)(A); 15 U.S.C. 9058c(d)(1)(C) Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance the department is managing, evaluating, and monitoring the federal award in compliance with the terms and conditions of the award and taking prompt action when instances of noncompliance are identified. Federal regulations limit the amount of federal funds that can be used for administrative expenditures. The department periodically prepared tracking spreadsheets during the fiscal year to monitor spending and ensure administrative expenditure limitations were not exceeded. We reviewed four randomly selected tracking spreadsheets and noted two tracking spreadsheets where there was insufficient detail to determine what category expenditures were associated with (administrative versus programmatic); and three tracking spreadsheets where there was no indication that the expenditures were within administrative expenditures limitations due to the periodic nature of the tracking. Without sufficiently designed and implemented controls, the department is at risk for exceeding their allowable administrative cost limits. We recommend department management ensure tracking spreadsheets are properly designed and sufficiently detailed to ensure compliance with administrative expenditures limitations.
2022-031 Oregon Housing and Community Services Comply with subrecipient monitoring requirements Federal Awarding Agency: U.S. Department of the Treasury Assistance Listing Number and Name: 21.027 Coronavirus State and Local Fiscal Recovery Fund (COVID-19) Federal Award Numbers and Years: OMB Approved No. 1505-0271, 2022 (COVID-19) Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness, Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 45 CFR 75.351; 45 CFR 75.352(b); 45 CFR 75.352(d) When recipients of Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) provide award funds to an entity to carry out objectives of program on behalf of the CSLFRF recipient, the entities receiving such funding are subrecipients. The recipient has the responsibility to monitor expenditures and activities subrecipients. Nearly all the department?s CSLFRF expenditures are comprised of payments to a private organization. Per the contract, the organization was hired to conduct eligibility assessments for the Emergency Rental Assistance program and be responsible to ensure only eligible applicants receive rental and utility assistance payments. CLSFRF funds were used for emergency rental assistance; therefore, the organization is carrying out a program on behalf of the department. The department then has the responsibility to monitor the expenditures and activities of the organization. The department incorrectly identified the organization as a vendor rather than a subrecipient during the contracting process. Per the guidance above, this was not an appropriate determination because the organization carries out eligibility determinations of the program. Management acknowledged no monitoring of the organization was performed during the audit period; therefore, there are no related key controls for the fiscal year ended June 30, 2022. Although program staff maintain a close working relationship with the organization, these interactions are not formalized and documented for the purpose of subrecipient monitoring. If subrecipient monitoring is not performed and documented, subawards could be used for unauthorized purposes and performance goals not met. We recommend department management reassess the department?s contracting process to appropriately identify whether an organization is a vendor or a subrecipient. If a subrecipient, we recommend the department comply with subrecipient monitoring requirements, including developing related internal controls and processes to monitor the expenditures and activities of the organization.
2022-065 Oregon Department of Education State did not meet maintenance of effort requirement Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425R, 84.425U & 84.425W, Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425R210047; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: Section 18008 of Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; Section 2004(a) of the American Rescue Plan (ARP) Act; 2 CFR 200.303 The CRRSA and the ARP acts require the State to maintain support for both elementary and secondary education and for higher education in fiscal year 2022 at least at the proportional level of the state?s support for elementary and secondary education and for higher education relative to the state?s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Department of Education did not meet the maintenance of effort provisions for fiscal year 2022 for elementary and secondary education. Although the state?s overall funding increased for education its proportional level relative to Oregon?s overall spending declined. The department is reliant on the legislative budget process. The department was in contact with the federal awarding agency about the maintenance of effort issue. The department submitted a waiver request to the U.S. Department of Education dated March 29, 2023. According to department management, budget changes and obtaining a clearer understanding of the other fund amount delayed the calculation for maintenance of effort. If the waiver is not approved, the department may be asked to return some of the funds. The total federal expenditures for the Education Stabilization Fund program for the fiscal year ended June 30, 2022 were $426 million. We recommend department management continue to actively track whether it will meet the maintenance of effort requirement and work with the federal awarding agency.
2022-066 Oregon Department of Education Improve subrecipient monitoring procedures Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425U & 84.425W Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C200048; 2020 (COVID-19), S425D200049; 2020 (COVID-19), S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332 Federal regulations require the department to evaluate each subrecipients risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate monitoring to perform. In addition, the department should monitor the activities of the subrecipients receiving funds to ensure the subaward is used for authorized purposes, is in compliance with Federal statutes, regulations, and the terms and condition of the subaward; and the subaward performance goals are achieved. Depending on the department risk assessment, which was not performed, the department could perform various monitoring tools to ensure accountability and compliance. As of June 30, 2022, the department was still in the process of drafting and implementing a plan to monitor the funds. The department had not completed a risk assessment process of the local educational agencies (LEA) for these funds and stated it planned to begin some desk or on-site monitoring in Spring 2023. $522 million in funds have been passed through to subrecipients as of June 30, 2022. The department required LEA?s to submit applications to receive funds and sign agreements that outlined all federal requirements. In addition, the department also required the LEA?s to complete a reimbursement request form that contains general ledger detail but no additional support is provided. According to the department, it follows-up with a LEA if funds appear to be ineligible or other questions are raised. Finally, although LEAs programs may have had a single audit the department could not provide a list of which LEAs had audits and whether there were findings or not. In fiscal year 2021, the department was also working to finalize its risk assessment and monitoring plans. However, the department experienced staff turnover which delayed its plans. Insufficient subrecipient monitoring increases the risk of not timely identifying subrecipients that are not administering federal awards in compliance with federal requirements. We recommend department management complete its risk assessment, consider the results of LEAs single audits and perform desk or on-site monitoring as necessary.
2022-067 Oregon Department of Education Ensure accuracy of federal reporting Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C200048; 2020 (COVID-19) Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.302(b); 2 CFR 200.303(a) Federal regulations require that federal reports include all activity of the reporting period and be supported by applicable accounting records. Federal regulations also require that the department file a separate report for the Governor?s Emergency Education Relief (GEER) expenditures for the period ending June 30, 2021. The department reported GEER information for the local education areas (LEAs) related to the comprehensive distance learning grant program. LEAs submit reimbursement to the department and this information is tracked in an excel database. The database includes various information, including funding types, dates, and amounts. During FY 2022, the department completed the reports using the database, but incorrectly filtered the data so some expenditures were not captured. This resulted in an underreporting of GEER expenditures by $13.9 million. We recommend department management ensure that accurate expenditure data is submitted to the federal government for federal reporting.
2022-065 Oregon Department of Education State did not meet maintenance of effort requirement Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425R, 84.425U & 84.425W, Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425R210047; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: Section 18008 of Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; Section 2004(a) of the American Rescue Plan (ARP) Act; 2 CFR 200.303 The CRRSA and the ARP acts require the State to maintain support for both elementary and secondary education and for higher education in fiscal year 2022 at least at the proportional level of the state?s support for elementary and secondary education and for higher education relative to the state?s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Department of Education did not meet the maintenance of effort provisions for fiscal year 2022 for elementary and secondary education. Although the state?s overall funding increased for education its proportional level relative to Oregon?s overall spending declined. The department is reliant on the legislative budget process. The department was in contact with the federal awarding agency about the maintenance of effort issue. The department submitted a waiver request to the U.S. Department of Education dated March 29, 2023. According to department management, budget changes and obtaining a clearer understanding of the other fund amount delayed the calculation for maintenance of effort. If the waiver is not approved, the department may be asked to return some of the funds. The total federal expenditures for the Education Stabilization Fund program for the fiscal year ended June 30, 2022 were $426 million. We recommend department management continue to actively track whether it will meet the maintenance of effort requirement and work with the federal awarding agency.
2022-066 Oregon Department of Education Improve subrecipient monitoring procedures Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425U & 84.425W Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C200048; 2020 (COVID-19), S425D200049; 2020 (COVID-19), S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332 Federal regulations require the department to evaluate each subrecipients risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate monitoring to perform. In addition, the department should monitor the activities of the subrecipients receiving funds to ensure the subaward is used for authorized purposes, is in compliance with Federal statutes, regulations, and the terms and condition of the subaward; and the subaward performance goals are achieved. Depending on the department risk assessment, which was not performed, the department could perform various monitoring tools to ensure accountability and compliance. As of June 30, 2022, the department was still in the process of drafting and implementing a plan to monitor the funds. The department had not completed a risk assessment process of the local educational agencies (LEA) for these funds and stated it planned to begin some desk or on-site monitoring in Spring 2023. $522 million in funds have been passed through to subrecipients as of June 30, 2022. The department required LEA?s to submit applications to receive funds and sign agreements that outlined all federal requirements. In addition, the department also required the LEA?s to complete a reimbursement request form that contains general ledger detail but no additional support is provided. According to the department, it follows-up with a LEA if funds appear to be ineligible or other questions are raised. Finally, although LEAs programs may have had a single audit the department could not provide a list of which LEAs had audits and whether there were findings or not. In fiscal year 2021, the department was also working to finalize its risk assessment and monitoring plans. However, the department experienced staff turnover which delayed its plans. Insufficient subrecipient monitoring increases the risk of not timely identifying subrecipients that are not administering federal awards in compliance with federal requirements. We recommend department management complete its risk assessment, consider the results of LEAs single audits and perform desk or on-site monitoring as necessary.
2022-065 Oregon Department of Education State did not meet maintenance of effort requirement Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425R, 84.425U & 84.425W, Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425R210047; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: Section 18008 of Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; Section 2004(a) of the American Rescue Plan (ARP) Act; 2 CFR 200.303 The CRRSA and the ARP acts require the State to maintain support for both elementary and secondary education and for higher education in fiscal year 2022 at least at the proportional level of the state?s support for elementary and secondary education and for higher education relative to the state?s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Department of Education did not meet the maintenance of effort provisions for fiscal year 2022 for elementary and secondary education. Although the state?s overall funding increased for education its proportional level relative to Oregon?s overall spending declined. The department is reliant on the legislative budget process. The department was in contact with the federal awarding agency about the maintenance of effort issue. The department submitted a waiver request to the U.S. Department of Education dated March 29, 2023. According to department management, budget changes and obtaining a clearer understanding of the other fund amount delayed the calculation for maintenance of effort. If the waiver is not approved, the department may be asked to return some of the funds. The total federal expenditures for the Education Stabilization Fund program for the fiscal year ended June 30, 2022 were $426 million. We recommend department management continue to actively track whether it will meet the maintenance of effort requirement and work with the federal awarding agency.
2022-065 Oregon Department of Education State did not meet maintenance of effort requirement Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425R, 84.425U & 84.425W, Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425R210047; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: Section 18008 of Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; Section 2004(a) of the American Rescue Plan (ARP) Act; 2 CFR 200.303 The CRRSA and the ARP acts require the State to maintain support for both elementary and secondary education and for higher education in fiscal year 2022 at least at the proportional level of the state?s support for elementary and secondary education and for higher education relative to the state?s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Department of Education did not meet the maintenance of effort provisions for fiscal year 2022 for elementary and secondary education. Although the state?s overall funding increased for education its proportional level relative to Oregon?s overall spending declined. The department is reliant on the legislative budget process. The department was in contact with the federal awarding agency about the maintenance of effort issue. The department submitted a waiver request to the U.S. Department of Education dated March 29, 2023. According to department management, budget changes and obtaining a clearer understanding of the other fund amount delayed the calculation for maintenance of effort. If the waiver is not approved, the department may be asked to return some of the funds. The total federal expenditures for the Education Stabilization Fund program for the fiscal year ended June 30, 2022 were $426 million. We recommend department management continue to actively track whether it will meet the maintenance of effort requirement and work with the federal awarding agency.
2022-066 Oregon Department of Education Improve subrecipient monitoring procedures Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425U & 84.425W Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C200048; 2020 (COVID-19), S425D200049; 2020 (COVID-19), S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332 Federal regulations require the department to evaluate each subrecipients risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate monitoring to perform. In addition, the department should monitor the activities of the subrecipients receiving funds to ensure the subaward is used for authorized purposes, is in compliance with Federal statutes, regulations, and the terms and condition of the subaward; and the subaward performance goals are achieved. Depending on the department risk assessment, which was not performed, the department could perform various monitoring tools to ensure accountability and compliance. As of June 30, 2022, the department was still in the process of drafting and implementing a plan to monitor the funds. The department had not completed a risk assessment process of the local educational agencies (LEA) for these funds and stated it planned to begin some desk or on-site monitoring in Spring 2023. $522 million in funds have been passed through to subrecipients as of June 30, 2022. The department required LEA?s to submit applications to receive funds and sign agreements that outlined all federal requirements. In addition, the department also required the LEA?s to complete a reimbursement request form that contains general ledger detail but no additional support is provided. According to the department, it follows-up with a LEA if funds appear to be ineligible or other questions are raised. Finally, although LEAs programs may have had a single audit the department could not provide a list of which LEAs had audits and whether there were findings or not. In fiscal year 2021, the department was also working to finalize its risk assessment and monitoring plans. However, the department experienced staff turnover which delayed its plans. Insufficient subrecipient monitoring increases the risk of not timely identifying subrecipients that are not administering federal awards in compliance with federal requirements. We recommend department management complete its risk assessment, consider the results of LEAs single audits and perform desk or on-site monitoring as necessary.
2022-065 Oregon Department of Education State did not meet maintenance of effort requirement Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425R, 84.425U & 84.425W, Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425R210047; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: Section 18008 of Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act; Section 2004(a) of the American Rescue Plan (ARP) Act; 2 CFR 200.303 The CRRSA and the ARP acts require the State to maintain support for both elementary and secondary education and for higher education in fiscal year 2022 at least at the proportional level of the state?s support for elementary and secondary education and for higher education relative to the state?s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Department of Education did not meet the maintenance of effort provisions for fiscal year 2022 for elementary and secondary education. Although the state?s overall funding increased for education its proportional level relative to Oregon?s overall spending declined. The department is reliant on the legislative budget process. The department was in contact with the federal awarding agency about the maintenance of effort issue. The department submitted a waiver request to the U.S. Department of Education dated March 29, 2023. According to department management, budget changes and obtaining a clearer understanding of the other fund amount delayed the calculation for maintenance of effort. If the waiver is not approved, the department may be asked to return some of the funds. The total federal expenditures for the Education Stabilization Fund program for the fiscal year ended June 30, 2022 were $426 million. We recommend department management continue to actively track whether it will meet the maintenance of effort requirement and work with the federal awarding agency.
2022-066 Oregon Department of Education Improve subrecipient monitoring procedures Federal Awarding Agency: U.S. Department of Education Assistance Listing Number and Name: 84.425C, 84.425D, 84.425U & 84.425W Education Stabilization Fund (COVID-19) Federal Award Numbers and Years: S425C200048; 2020 (COVID-19), S425D200049; 2020 (COVID-19), S425C210048; 2021 (COVID-19), S425D210049; 2021 (COVID-19), S425U210049; 2021 (COVID-19), S425W210038; 2021 (COVID-19) Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.332 Federal regulations require the department to evaluate each subrecipients risk of noncompliance with Federal statues, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate monitoring to perform. In addition, the department should monitor the activities of the subrecipients receiving funds to ensure the subaward is used for authorized purposes, is in compliance with Federal statutes, regulations, and the terms and condition of the subaward; and the subaward performance goals are achieved. Depending on the department risk assessment, which was not performed, the department could perform various monitoring tools to ensure accountability and compliance. As of June 30, 2022, the department was still in the process of drafting and implementing a plan to monitor the funds. The department had not completed a risk assessment process of the local educational agencies (LEA) for these funds and stated it planned to begin some desk or on-site monitoring in Spring 2023. $522 million in funds have been passed through to subrecipients as of June 30, 2022. The department required LEA?s to submit applications to receive funds and sign agreements that outlined all federal requirements. In addition, the department also required the LEA?s to complete a reimbursement request form that contains general ledger detail but no additional support is provided. According to the department, it follows-up with a LEA if funds appear to be ineligible or other questions are raised. Finally, although LEAs programs may have had a single audit the department could not provide a list of which LEAs had audits and whether there were findings or not. In fiscal year 2021, the department was also working to finalize its risk assessment and monitoring plans. However, the department experienced staff turnover which delayed its plans. Insufficient subrecipient monitoring increases the risk of not timely identifying subrecipients that are not administering federal awards in compliance with federal requirements. We recommend department management complete its risk assessment, consider the results of LEAs single audits and perform desk or on-site monitoring as necessary.
2022-049 Oregon Health Authority Return overdraw of reclassified FEMA expenditures Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements (COVID-19); 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (COVID-19) Federal Award Numbers and Years: 93.268: 5 NH23IP922626 (COVID-19); 6 NH23IP922626 (COVID-19); 93.323: 6 NU50CK000541 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: 93.268: $36,783 (known) (COVID-19); 93.323: $73,333 (known) (COVID-19) Criteria: 2 CFR 200.403 During the COVID-19 pandemic, the Oregon Health Authority (department) spent money from Federal Emergency Management Agency (FEMA) awards to address needs in addressing the pandemic. Due to delays in receiving federal reimbursement for the expenditures, the department reclassified the expenditures to other programs where reimbursements would occur timelier. In our testing of Activities Allowed or Unallowed, we reviewed two individually significant items in the accounting system reclassifying 398 and 914 individual expenditures from the FEMA grants to the Immunization Cooperative Agreements program and Epidemiology and Laboratory Capacity program, respectively. Based upon the account coding of the original transactions, all of the reclassifications were allowable and consistent with program requirements. However, we found several transactions were reclassified twice, resulting in an excess of $36,783 charged to the Immunization program and $73,333 charged to the Epidemiology program. The reclassifications were completed in two batches and the managerial review of the reclassifying transactions failed to detect some transactions were included in both batches. We recommend department management correct the entries and reimburse excess cash drawn to the federal agency for unallowable costs. We also recommend department management revise the review procedures to verify that the same expenditure transactions are not duplicated in multiple batches.
2022-050 Oregon Health Authority Improve review of expenditure transactions Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements (COVID-19) Federal Award Numbers and Years: 5 NH23IP922626, 2022 (COVID-19); 6 NH23IP922626, 2022 (COVID-19) Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding: Significant Deficiency Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.303 During fiscal year 2022, payroll for the Oregon Health Authority was processed through the Oregon State Payroll Application (OSPA). As part of each monthly payroll cycle, managers are expected to review and approve employee?s reported hours to ensure expenditures are accurate and are billed to the correct program(s). Although state policy requires managers to review the timesheets, the automated controls in the system will process the payroll without a review, effectively making the managerial review optional. The OSPA was retired as of November 30, 2022. However, the new Workday application that went into effect to replace the OSPA has the same weakness where payroll will process without regard for the managerial review. As part of our testing of program expenditures, we found that 3 of 134 timesheets were not reviewed by a manager prior to release into the payroll system. For each of these items, we were able to perform alternative procedures to verify that the amounts charged to the program were appropriate and there are no questioned costs. However, the lack of review increases the risk that inappropriate payroll costs may be charged to the program. We recommend management implement procedures to ensure that all employee payroll submissions are properly reviewed, and payroll is appropriately charged to the correct cost center or program.
2022-045 Oregon Health Authority Submit required FFATA reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements; 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases; 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.268: 5 NH23IP922626; 6 NH23IP922626; 93.323: 6 NU50CK000541; 93.958: 1B09SM083823, 2021; 93.959: 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department?s subawards subject to FFATA reporting during the audit period. We determined: ? Five of 30 Mental Health Block Grant (MHBG) subawards were not reported, totaling $4.2 million in obligations. ? 12 of 65 Substance Abuse Block Grant (SABG) subawards were not reported, totaling $6.2 million in obligations. ? Four of 37 Epidemiology and Laboratory Capacity (ELC) subawards were not reported, totaling almost $55.5 million in obligations. ? Five of 39 Immunization Cooperative Agreements subawards were not reported, totaling $6.3 million in obligations. Of the total not reported, one SABG, one ELC, and two Immunization subawards were not reported in the FSRS due to oversights in the department?s reporting process. The remaining unreported subawards resulted from the department?s suspension of FFATA reporting stemming from the federal replacement of the DUNS number with the Unique Entity Identifier (UEI) in May 2022. The department did not have UEI numbers for all subrecipients at the time of the replacement which prevented the department from submitting accurate reports. FFATA reporting was suspended through the end of state fiscal year 2022 and into the following state fiscal year. Although the department suspended FFATA reporting in the FSRS, a tracking spreadsheet was maintained that included all subaward award information needed for reporting once reporting is resumed. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management implement controls to ensure all subawards are appropriately tracked and reported.
2022-049 Oregon Health Authority Return overdraw of reclassified FEMA expenditures Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements (COVID-19); 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (COVID-19) Federal Award Numbers and Years: 93.268: 5 NH23IP922626 (COVID-19); 6 NH23IP922626 (COVID-19); 93.323: 6 NU50CK000541 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: 93.268: $36,783 (known) (COVID-19); 93.323: $73,333 (known) (COVID-19) Criteria: 2 CFR 200.403 During the COVID-19 pandemic, the Oregon Health Authority (department) spent money from Federal Emergency Management Agency (FEMA) awards to address needs in addressing the pandemic. Due to delays in receiving federal reimbursement for the expenditures, the department reclassified the expenditures to other programs where reimbursements would occur timelier. In our testing of Activities Allowed or Unallowed, we reviewed two individually significant items in the accounting system reclassifying 398 and 914 individual expenditures from the FEMA grants to the Immunization Cooperative Agreements program and Epidemiology and Laboratory Capacity program, respectively. Based upon the account coding of the original transactions, all of the reclassifications were allowable and consistent with program requirements. However, we found several transactions were reclassified twice, resulting in an excess of $36,783 charged to the Immunization program and $73,333 charged to the Epidemiology program. The reclassifications were completed in two batches and the managerial review of the reclassifying transactions failed to detect some transactions were included in both batches. We recommend department management correct the entries and reimburse excess cash drawn to the federal agency for unallowable costs. We also recommend department management revise the review procedures to verify that the same expenditure transactions are not duplicated in multiple batches.
2022-051 Oregon Health Authority Correct expenditures charged to the incorrect program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (COVID-19) Federal Award Numbers and Years: 6 NU50CK000541 (COVID-19) Compliance Requirements: Activities Allowed or Unallowed Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: $356,050 (COVID-19) Criteria: 2 CFR 200.302 To address the COVID-19 pandemic, the Center for Disease Control (CDC) awarded the Oregon Health Authority (department) over $495 million in additional funding beyond the normal funding levels for the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program. The funding was awarded for specific purposes such as enhancing detection, reopening schools, and enhancing detection expansion. The purposes of these awards generally do not allow for expenditures directly related to operating the COVID-19 vaccine clinics. In our testing, we identified two payments totaling $356,050 relating to emergency medical technicians attending vaccine clinics to assist if those receiving the vaccine had adverse reactions and required medical attention. Per department management, the transactions should have been charged to a different grant provided by the Federal Emergency Management Agency (FEMA). The error was caused by incorrect account coding when the invoice was processed. Other transactions under this contract were properly charged to the FEMA grant. We recommend management correct the accounting error and ensure the expenditures are charged to the correct programs. We also recommend the department determine if there are additional questioned costs relating to the advanced cash draw as the federal programs have different timing for federal reimbursements.
2022-052 Oregon Health Authority Improve review of expenditure transactions Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (COVID-19) Federal Award Numbers and Years: 6 NU50CK000541, 2021 (COVID-19) Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: $35,416 (known) (COVID-19) Criteria: 2 CFR 200.303 As part of our testing, we reviewed expenditures charged to the program to ensure they were properly approved and an appropriate use of program resources. We randomly selected 25 of 2,355 non-payroll transactions as the basis for our testing. For one of the transactions, there was no evidence the expenditures had been reviewed and approved as appropriate expenditures for the program. The specific transaction was for cell phones and data plans on wireless devices and consisted of 584 separate devices. Only 24 (2.5%) of those devices had been approved by a manager. The department will pay the vendor for the full amount of the invoice. Managers are expected to review the charges for their unit and verify they are directed to the proper cost center. The $35,416 in questioned costs represents the charges for the devices without approval. Also, during fiscal year 2022, payroll for the department was processed through the Oregon State Payroll Application (OSPA). As part of each monthly payroll cycle, managers are expected to review and approve employee?s reported hours to ensure expenditures are accurate and are billed to the correct program(s). Although state policy requires managers to review the timesheets, the automated controls in the system will process the payroll without a review, effectively making the managerial review optional. The OSPA was retired as of November 30, 2022; however, the replacement payroll system operates in a similar manner for managerial review. As part of our testing of payroll expenditures, we found one of 25 randomly selected timesheets were not reviewed by a manager prior to release into the payroll system. We were able to perform alternative procedures to verify the amounts charged to the program were appropriate and there are no questioned costs. The lack of review increases the risk that inappropriate costs may be charged to federal programs. We recommend management ensure wireless device charges are properly reviewed, and expenditures are charged to the correct cost center or program. We also recommend management implement procedures to ensure all employee payroll submissions are reviewed and approved by program management.
2022-053 Oregon Health Authority Improve financial reporting accuracy Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases (COVID-19) Federal Award Numbers and Years: 6 NU50CK000541, 2020 (COVID-19); 6 NU50CK000541, 2021 (COVID-19) Compliance Requirements: Reporting Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: 2021-022 Questioned Costs: N/A Criteria: 2 CFR 200.328 In response to the COVID-19 pandemic, the Centers for Disease Control (CDC) awarded states substantial funds for the purpose of addressing the pandemic at the state level. Among other requirements, states are required to submit monthly financial reports to the CDC providing totals spent on travel, payroll, equipment, and other categories. During the fiscal year 2021 audit, we reported a material weakness relating to the accuracy of the amounts reported to the CDC. The same issue persisted throughout fiscal year 2022. As of June 30, 2022, the department had not taken the necessary actions to implement the prior recommendations and had not fully corrected the reports submitted in fiscal years 2021 and 2022. However, as of March 2023, the department had implemented the appropriate corrective actions and the previously inaccurate reports have been updated, including the reports for fiscal year 2022. Audit standards require that we report on the status as of June 30, 2022. We recommend department management maintain the necessary internal controls to ensure the monthly financial reports are accurate and agree to the accounting records.
2022-045 Oregon Health Authority Submit required FFATA reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements; 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases; 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.268: 5 NH23IP922626; 6 NH23IP922626; 93.323: 6 NU50CK000541; 93.958: 1B09SM083823, 2021; 93.959: 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department?s subawards subject to FFATA reporting during the audit period. We determined: ? Five of 30 Mental Health Block Grant (MHBG) subawards were not reported, totaling $4.2 million in obligations. ? 12 of 65 Substance Abuse Block Grant (SABG) subawards were not reported, totaling $6.2 million in obligations. ? Four of 37 Epidemiology and Laboratory Capacity (ELC) subawards were not reported, totaling almost $55.5 million in obligations. ? Five of 39 Immunization Cooperative Agreements subawards were not reported, totaling $6.3 million in obligations. Of the total not reported, one SABG, one ELC, and two Immunization subawards were not reported in the FSRS due to oversights in the department?s reporting process. The remaining unreported subawards resulted from the department?s suspension of FFATA reporting stemming from the federal replacement of the DUNS number with the Unique Entity Identifier (UEI) in May 2022. The department did not have UEI numbers for all subrecipients at the time of the replacement which prevented the department from submitting accurate reports. FFATA reporting was suspended through the end of state fiscal year 2022 and into the following state fiscal year. Although the department suspended FFATA reporting in the FSRS, a tracking spreadsheet was maintained that included all subaward award information needed for reporting once reporting is resumed. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management implement controls to ensure all subawards are appropriately tracked and reported.
2022-035 Department of Human Services Improve controls over benefit time tracking and discontinuance of federal funding Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Allowable Costs/Cost Principles Type of Finding: Material Weakness; Noncompliance Prior Year Finding: N/A Questioned Costs: $1,866 known Criteria: 45 CFR 264.1 Federal regulations prohibit federal funding to families that include an adult head-of-household who has received federal assistance for a cumulative of 60 months, and who do not have an allowed exception. The Oregon Department of Human Services? (department) case management system, Oregon Eligibility (ONE), tracks months counting towards the federal limit. When 60 months is reached, ONE sends an indicator to the financial subsystem containing funding coding. If Temporary Assistance for Needy Families (TANF) benefits continue, they are to be funded with state funds. The population of cases identified in ONE as having reached 60 cumulative federal months is obtained from the quarterly performance data reports compiled by a service provider. As stated in a separate finding, titled `Ensure performance data reports are complete and accurate,? we determined the data reports are not complete or accurate, therefore, the population of cases over 60 federal months is also incomplete. However, we tested some cases in the reports to verify ONE was accurately counting federal months and to determine if federal funding was appropriately discontinued. We randomly selected ten cases from an incomplete population of 3,193 and found one case where federal funding inappropriately continued after reaching 60 months due to a coding issue within the financial subsystem, resulting in federal overpayments of $1,944 for recurring monthly cash assistance benefits, and $1,866 for expenses related to seeking employment (JOBS) in fiscal year 2022. The department was aware of the cash assistance coding issue and the JOBS coding issue as early as October 2021. A $5.6 million correction for regular cash assistance was made in accounting records in September 30, 2022, which corrected the cash assistance benefits portion of the error noted above. The JOBS coding issue has yet to be corrected in accounting records and the department did not have an adjustment total readily available. As the regular cash assistance correction surpassed $5 million, we have reasonable assurance that the uncorrected federal JOBS payments also exceed $25,000 in likely questioned costs. We recommend department management make timely corrections to federal/state coding splits in the financial subsystem and also make timely corrections in state accounting records. We also recommend the department reimburse the federal agency for unallowable costs.
2022-036 Department of Human Services Ensure performance data reports are complete and accurate Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Reporting Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: 2021-009, 2020-013, 2019-008 Questioned Costs: N/A Criteria: 45 CFR 265.7(a) and (b) and (f) Federal regulations require the department to collect monthly and report quarterly certain financial and non-financial data elements for services paid with Temporary Assistance for Needy Families (TANF) federal funding in the ACF-199 TANF data report. Federal regulations also require the department to report data quarterly for TANF eligible clients whose benefits are paid with designated state funds called maintenance of effort (MOE) in the ACF-209 SSP-MOE data report. Both data reports should be supported by applicable performance records. During fiscal year 2021, the department transitioned key aspects of the TANF program to Oregon Eligibility (ONE) for case management, while TANF child welfare payments continued to be recorded in OR-Kids the child welfare system. The department contracts with a service provider to extract data from ONE and OR-Kids to populate the data reports. Program staff currently work with the service provider to obtain comprehensible data reports prior to submission to review them for errors and when found, each issue is logged as a defect for the service provider to correct. The department and the U.S. Administration for Children and Families identified data reports submitted for state fiscal year 2022 were incorrect. The federal quarterly report ended September 30, 2021, was revised and resubmitted but still had likely errors according to program staff. Quarterly reports ended December 31, 2021 (Q1), March 31, 2022 (Q2), and June 30, 2022 (Q3), were corrected and resubmitted in February 2023. Data reports are comprised of individual component reports identified by ?T? for ACF-199 TANF and ?M? for ACF-209 MOE. We reviewed the resubmitted Q1, Q2, and Q3 reports and found: ? The Q1 TANF T2 and MOE M2 reports corrected a prior known defect. The fields identifying work participation have populated associated fields with job type and hours. ? The Q3 T6 report showing number of applications, number and types of families, and amount of assistance, reported $4.5 million more than supported by accounting records. ? The April 2022 T1 report contained 4,035 case numbers not found in the underlying system records, and 1,081 from system records not reported in the T1 report. ? OR-Kids cases in the Q1, Q2, and Q3 T1 24 of 45 fields left blank. ? In 10 of 21,171 cases recorded as having surpassed the federal funding limit of 60 months in the Q1, Q2, and Q3 T2 reports, we found three where the T2 reports did not agree to support in ONE. As the performance data reports are known to be incomplete and inaccurate, we are unable to test them for compliance with federal reporting requirements. To date, the implementation of ONE has not resolved findings related to performance data reporting, which have been ongoing since fiscal year 2010. Though the department has yet to receive a Service Organization Control (SOC) report from the service organization administering ONE and compiling data reports the department is in the process of contracting for a SOC report. Without an annual SOC report, the department does not have assurance controls are functioning as intended at the service organization for the TANF program. We recommend department management continue to review ACF-199 and ACF-209 reports prior to submission and monitor known compilation defects to ensure performance data reports submitted are complete and accurate. We also recommend department management obtain an annual SOC report over the service organization?s internal controls for the ONE application.
2022-037 Department of Human Services Improve accuracy of cases reported as noncooperating with child support Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Special Tests and Provisions Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 45 CFR 264.30-31 Federal regulations require the department to refer all appropriate individuals in the family of a child to the child support enforcement agency. If the department determines referred individuals are not cooperating, without good cause, in establishing, modifying, or enforcing a support order with respect to the child, then the department must reduce or deny assistance in the Temporary Assistance for Needy Families (TANF) program. The department faces reduced State family assistance grant payments for failure to enforce penalties against noncompliant individuals. In March 2020, the department established good cause exemptions due to Covid for all individuals. Noncooperation sanctions were reinstated in April 2021, by which time the department had moved its case management system to Oregon Eligibility (ONE). When a caseworker enters a child support noncooperation code in ONE, the system should automatically reduce TANF benefits. The population of cases identified in ONE as not cooperating with child support is obtained from the quarterly performance data reports compiled by a service provider. As stated in a separate finding, titled `Ensure performance data reports are complete and accurate,? we determined the data reports are not complete or accurate, therefore, the population of cases not cooperating with child support is also incomplete. However, we tested some cases in the reports to verify ONE was appropriately reducing benefits. The quarterly performance data reports for periods October 1, 2021, through June 30, 2022, consisted of 133 unique cases identified as not cooperating with child support. We randomly selected 14 cases and could not find support in ONE for noncooperation. The department identified one case entered in ONE incorrectly by a caseworker and the remaining cases had various nuances causing the performance data reports to retrieve the information incorrectly. All 14 cases were either cooperating with or not applicable to child support. The department also identified at least eight defects in child support data retrieval it reported to the service provider. We are unable to determine if ONE is correctly reducing TANF benefits when a case is not cooperating with child support. We recommend department management ensure noncooperative child support cases from ONE are completely and accurately reported in its performance data reports.
2022-038 Department of Human Services Ensure work participation rate calculation uses verified and accurate data Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Special Test and Provisions Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: 2021-010, 2020-014, 2019-009 Questioned Costs: N/A Criteria: 45 CFR 261.61-62, 65 Federal regulations require each state maintain adequate documentation, verification, and internal control procedures to ensure the accuracy of data used in calculating work participation rates. Each state must have procedures to count and verify reported hours of work and must comply with its Work Verification Plan as approved by the U.S. Department of Health and Human Services (DHHS). Oregon?s Work Verification Plan outlines a system of controls for how reported hours will be verified and documented, and for reviews and monitoring procedures to identify errors. Work participation hours are reported via the quarterly Temporary Assistance for Needy Families (TANF) ACF-199 data reports and for benefits paid with designated state funds called maintenance of effort (MOE), the ACF-209 reports. As stated in a separate finding, titled `Ensure performance data reports are complete and accurate,? we determined the data reports are not complete or accurate. However, we found the department did correct a previous issue in which work participation hours on the ACF-199 report were left blank. Although reports were known to be incomplete, we reviewed the reporting periods October 1, 2021, through June 30, 2022, to test for compliance of the Work Verification Plan. We reviewed 20 randomly selected ACF-199 cases from a population of 16,249, and 20 randomly selected ACF-209 cases from a population of 146,324 of participating clients for verification of work activity participation. We found: ? Five of 20 ACF-199 cases with reported participation hours did not agree with hours in the system of record TRACS. ? 14 of 20 ACF-199 cases lacked support for the reported hours. ? 9 of 20 ACF-209 cases lacked support for the reported hours. These inaccurate or unverified hours were reported to DHHS for use in calculating the work participation rate. If the state fails to follow the approved Work Verification Plan, DHHS may penalize the state. We recommend TANF program management ensure the work participation rate is calculated appropriately using verified and accurate participation data in adherence to the department?s Work Verification Plan. We also recommend program management review the system of controls and identify where improvements are needed to ensure compliance with the work verification plan.
2022-039 Department of Human Services Improve documentation of required income and benefit verifications Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Special Tests and Provisions Type of Finding: Material Weakness Prior Year Finding: 2021-011 Questioned Costs: N/A Criteria: 45 CFR 205.55 Federal regulations require each state to participate in the Income Eligibility and Verification System (IEVS), which for Oregon, includes using income and benefit screens accessible through Oregon Employment Department, Internal Revenue Service, and Social Security Administration, when making Temporary Assistance for Needy Families (TANF) eligibility determinations. The department?s current procedure instructs caseworkers to narrate ?IEVS checked? in the case management system, Oregon Eligibility (ONE), after reviewing all appropriate IEVS screens at the time of eligibility determination. The department submitted change requests to the eligibility system?s service provider that would prohibit ONE from paying benefits until all IEVS screens are checked; however, the system change has not yet been completed. From a population of 105,267 TANF benefit payments recorded in ONE we randomly selected a sample of 40 and two additional individually significant payments for testing. We found in 16 cases, there was no narration of the IEVS check by caseworkers, in either ONE or the former narrative system. We verified these clients did meet the TANF eligibility criteria related to IEVS screens, however, by not providing assurance of verification of the use of IEVS screens, the department increases the risk of providing benefits to TANF ineligible applicants. We recommend department management ensure verification of income and benefits with IEVS screens is clearly documented in client case files when determining client eligibility.
2022-040 Department of Human Services Improve controls to ensure eligibility criteria are met Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.558 Temporary Assistance for Needy Families Federal Award Numbers and Years: 2021G996115, 2021; 2022G996115, 2022 Compliance Requirement: Eligibility Type of Finding: Significant Deficiency, Noncompliance Prior Year Finding: N/A Questioned Costs: $9,569 (known); $931,750 (likely) Criteria: 45 CFR 264.1; Oregon TANF State Plan The State of Oregon Temporary Assistance for Needy Families (TANF) State Plan (Plan) defines financial neediness criteria with its adjusted income limit tables. Federal regulations establish 60 cumulative months as the length of time a client may receive federal TANF assistance. The department uses its case management system, Oregon Eligibility (ONE), to count federal-eligible benefit months, and when 60 months is reached, an indicator is sent to the financial subsystem to change federal funding to state funding. From a population of 105,267 TANF benefit payments recorded in ONE, we randomly selected a sample of 40 and two additional individually significant payments for testing. We found: ? One sample?s financial eligibility information included a disaster relief benefit without details showing the date of payment and the covered time period. As a result, auditors and the department are unable to determine if this case met financial eligibility criteria, resulting in questioned costs of $1,311. ? One individually significant case?s child support and spousal support were entered incorrectly into ONE. The countable income at time of certification did not meet the adjusted income limit, making the client ineligible for TANF benefits. Questioned costs for this case total $8,258. We recommend department management ensure federally-funded client benefits are paid on behalf of eligible individuals, and documentation is retained to support eligibility decisions. We also recommend department management correct the identified error cases and reimburse the federal agency for questioned costs.
2022-032 Oregon Housing and Community Services Ensure subrecipient risk assessments and fiscal monitoring are performed and required grant information is communicated timely to subrecipients Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2001ORE5C3, 2020 (COVID-19); 2102ORLIEA, 2021; 2102ORE5C6 , 2021 (COVID-19); 2202ORLIEA, 2022 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR ? 200.332(a) ? (h) Federal regulations require that pass-through entities evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward to determine the extent and scope of subrecipient monitoring activities. Monitoring activities should be based on the results of a given subrecipient?s determined risk. Pass-through entities must also communicate certain award information to subrecipients as the time of the subaward. The department, as the pass-through entity, has long-established subrecipient monitoring procedures broken into two categories: program and fiscal monitoring. Program monitoring is performed by program-specific staff and focuses on requirements related to certain aspects of Activities Allowed and Client Eligibility. During FY2022, the department performed program monitoring activities as planned. Fiscal monitoring reviews compliance requirements related to Allowable Costs, Activities Allowed, and Earmarking. However, fiscal monitoring activities were limited due to staff turnover. As a result, limited fiscal monitoring procedures were performed for 5 of 17 subrecipients, and fiscal monitoring risk assessments were not performed for any of the 17 subrecipients. Without the performance of subrecipient risk assessments and adequate fiscal monitoring, the department risks distributing program funds to subrecipients out of compliance with federal program requirements. Additionally, we reviewed 5 randomly selected subrecipients to determine whether all required grant award information was communicated at the time of the subaward. For all of the 5 subrecipients reviewed, only some of the required information was communicated at the time of the award. The required information missing in the original grant agreements was communicated via agreement amendments several months later. Without timely communication of required grant information, subrecipients may not have all the information they need for the subaward they received. We recommend department management ensure subrecipient risk assessments are performed for all subrecipients and ensure required fiscal monitoring activities are performed based on the results of the risk assessments. We also recommend department management ensure all required award information is communicated to subrecipients at the time of the subawards.
2022-033 Oregon Housing and Community Services Ensure financial reports are submitted Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2002ORLIEA, 2020; 2102ORE5C6, 2021 (COVID-19) Compliance Requirement: Reporting Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: 2021 ? 012 Questioned Costs: N/A Criteria: 2 CFR ? 200.303(a), (c)-(d); 2 CFR ? 200.328 Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance the department is managing the federal award in compliance with the terms and conditions of the federal award. Additionally, management is responsible for evaluating and monitoring the department?s compliance with the terms and conditions of federal awards and taking prompt action when instances of noncompliance are identified. Federal Financial Reports, SF-425?s, are required to be submitted annually for each open grant award ninety days after the end of the federal fiscal year. The department did not submit SF-425?s for two of the four open grants for the federal fiscal period ended September 30, 2021. This is an improvement from the prior fiscal year when the department hadn?t submitted any of the SF-425 reports for open grants. Department management cited a federal reporting system issue where awards are not appropriately tied to the correct grant identification number, which has hindered their ability to submit financial reports. As a result, the department was not in compliance with financial reporting requirements in accordance with the terms and conditions of their grant agreements. We recommend department management work with their federal partners to determine if unsubmitted reports should be completed and to ensure reporting compliance in future fiscal periods.
2022-034 Oregon Housing and Community Services Ensure review of subrecipient requests for funds verifies immediate cash needs are supported Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2001ORE5C3, 2020 (COVID-19); 2102ORLIEA, 2021; 2102ORE5C6, 2021 (COVID-19); 2202ORLIEA, 2022 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR ? 200.305(b), (b)(1); 2 CFR ? 200.508 Federal regulations require that auditees maintain documentation as needed for the performance of audit procedures related to the Single Audit. Additionally, regulations require payment advances should be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the subrecipient for carrying out the approved program. We reviewed 60 sample cash draws and were unable to obtain adequate supporting documentation for 4 subrecipient requests for reimbursement/advances demonstrating they were appropriate and for immediate cash needs. We also identified an advance payment for which there was not an adequate explanation indicating why an advance was needed. These 5 exceptions totaled $124,304 in expenditures. Department management cited a breakdown in control process and communicated their intention to train relevant staff to ensure adequate support is obtained. Without adequate verification of cash needs, the department could be sending funds to subrecipients that are not for a reimbursement of expenditures or immediate cash needs. We recommend department management strengthen internal controls to ensure support for subrecipient requests for funds adequately documents they are appropriate and for immediate cash needs.
2022-032 Oregon Housing and Community Services Ensure subrecipient risk assessments and fiscal monitoring are performed and required grant information is communicated timely to subrecipients Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2001ORE5C3, 2020 (COVID-19); 2102ORLIEA, 2021; 2102ORE5C6 , 2021 (COVID-19); 2202ORLIEA, 2022 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR ? 200.332(a) ? (h) Federal regulations require that pass-through entities evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward to determine the extent and scope of subrecipient monitoring activities. Monitoring activities should be based on the results of a given subrecipient?s determined risk. Pass-through entities must also communicate certain award information to subrecipients as the time of the subaward. The department, as the pass-through entity, has long-established subrecipient monitoring procedures broken into two categories: program and fiscal monitoring. Program monitoring is performed by program-specific staff and focuses on requirements related to certain aspects of Activities Allowed and Client Eligibility. During FY2022, the department performed program monitoring activities as planned. Fiscal monitoring reviews compliance requirements related to Allowable Costs, Activities Allowed, and Earmarking. However, fiscal monitoring activities were limited due to staff turnover. As a result, limited fiscal monitoring procedures were performed for 5 of 17 subrecipients, and fiscal monitoring risk assessments were not performed for any of the 17 subrecipients. Without the performance of subrecipient risk assessments and adequate fiscal monitoring, the department risks distributing program funds to subrecipients out of compliance with federal program requirements. Additionally, we reviewed 5 randomly selected subrecipients to determine whether all required grant award information was communicated at the time of the subaward. For all of the 5 subrecipients reviewed, only some of the required information was communicated at the time of the award. The required information missing in the original grant agreements was communicated via agreement amendments several months later. Without timely communication of required grant information, subrecipients may not have all the information they need for the subaward they received. We recommend department management ensure subrecipient risk assessments are performed for all subrecipients and ensure required fiscal monitoring activities are performed based on the results of the risk assessments. We also recommend department management ensure all required award information is communicated to subrecipients at the time of the subawards.
2022-033 Oregon Housing and Community Services Ensure financial reports are submitted Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2002ORLIEA, 2020; 2102ORE5C6, 2021 (COVID-19) Compliance Requirement: Reporting Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: 2021 ? 012 Questioned Costs: N/A Criteria: 2 CFR ? 200.303(a), (c)-(d); 2 CFR ? 200.328 Department management is responsible for establishing and maintaining effective internal control that provides reasonable assurance the department is managing the federal award in compliance with the terms and conditions of the federal award. Additionally, management is responsible for evaluating and monitoring the department?s compliance with the terms and conditions of federal awards and taking prompt action when instances of noncompliance are identified. Federal Financial Reports, SF-425?s, are required to be submitted annually for each open grant award ninety days after the end of the federal fiscal year. The department did not submit SF-425?s for two of the four open grants for the federal fiscal period ended September 30, 2021. This is an improvement from the prior fiscal year when the department hadn?t submitted any of the SF-425 reports for open grants. Department management cited a federal reporting system issue where awards are not appropriately tied to the correct grant identification number, which has hindered their ability to submit financial reports. As a result, the department was not in compliance with financial reporting requirements in accordance with the terms and conditions of their grant agreements. We recommend department management work with their federal partners to determine if unsubmitted reports should be completed and to ensure reporting compliance in future fiscal periods.
2022-034 Oregon Housing and Community Services Ensure review of subrecipient requests for funds verifies immediate cash needs are supported Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.568 Low-Income Home Energy Assistance Program, 93.568 Low-Income Home Energy Assistance Program (COVID-19) Federal Award Numbers and Years: 2001ORE5C3, 2020 (COVID-19); 2102ORLIEA, 2021; 2102ORE5C6, 2021 (COVID-19); 2202ORLIEA, 2022 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR ? 200.305(b), (b)(1); 2 CFR ? 200.508 Federal regulations require that auditees maintain documentation as needed for the performance of audit procedures related to the Single Audit. Additionally, regulations require payment advances should be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the subrecipient for carrying out the approved program. We reviewed 60 sample cash draws and were unable to obtain adequate supporting documentation for 4 subrecipient requests for reimbursement/advances demonstrating they were appropriate and for immediate cash needs. We also identified an advance payment for which there was not an adequate explanation indicating why an advance was needed. These 5 exceptions totaled $124,304 in expenditures. Department management cited a breakdown in control process and communicated their intention to train relevant staff to ensure adequate support is obtained. Without adequate verification of cash needs, the department could be sending funds to subrecipients that are not for a reimbursement of expenditures or immediate cash needs. We recommend department management strengthen internal controls to ensure support for subrecipient requests for funds adequately documents they are appropriate and for immediate cash needs.
2022-058 Department of Human Services Perform timely reconciliations of refinanced OR-Kids transactions Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.667 Social Services Block Grant Federal Award Numbers and Years: 2101ORSOSR, 2021; 2201ORSOSR, 2022 Compliance Requirement: Period of Performance Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $1,308,457 (likely) Criteria: 42 USC 1397a(c); 45 CFR 75.386a(2); 45 CFR 96.30b(2) According to federal requirements, to be eligible for federal funding, expenditures must be expended in the fiscal year allotted or in the succeeding fiscal year (period of performance). Additionally, federal post-closeout requirements stipulate the return of any funds due because of later refunds, corrections, or other transactions. As part of the grant closeout process, block grants also require the grantees to report the total funds expended and the date of the last expenditure. Grant closeout is the process by which the federal awarding agency determines that all applicable administrative actions and all required work have been completed. Social Services Block Grant (SSBG) has expenditures originating from the child welfare system, OR-Kids. OR-Kids is used to manage placements, eligibility, payments, and other case information. When various corrections are initiated, OR-Kids can re-process transactions as far back as January 1, 2008. For some placement corrections, OR-Kids processed the recovery of the funds in a state grant (Miscellaneous Other Fund grant), instead of the federal grant. To date, the department has not completed permanent fixes to the OR-Kids system to prevent these re-processing errors from occurring. During fiscal year 2022, the department was reconciling the Miscellaneous Other Fund grant and identified refunds related to SSBG. The refinanced expenditures reduced the amount of SSBG expenditures originally reported in closed grant awards. Instead of submitting a refund, the department identified expenditures recorded in subsequent grants that could have been used to backfill the reduction of expenditures. Allowable expenditures, that met the period of performance, were subsequently moved. To illustrate, a total of $1.3 million of expenditures were moved in the accounting system from grant award 21 (federal fiscal year 2021) to grant award 20. The department then moved expenditures totaling $1.2 million from grant award 20 to grant award 19. This process continued for all grant awards going back to grant award 11 (federal fiscal year 2011). The table below illustrates the movement of expenditures between grant awards. [See schedule of findings/questioned costs for table] Although the department only moved expenditures that qualified for each respective period of performance, we question whether the federal awarding agency would allow the department to backfill the $1.3 million of expenditures in question after grant closeout had been completed. We recommend department management conduct more timely reconciliations of OR-Kids refinancing adjustments to ensure adjustments are made during the related periods of performance. We further recommend management work with its federal awarding agency to determine if it is appropriate to backfill program expenditures between grants to account for the reduction in expenditures created by the reconciliation process. If not appropriate, the questioned costs should be repaid to the federal awarding agency.
2022-047 Oregon Health Authority Implement controls to comply with subrecipient monitoring requirements Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.788 Opioid STR (Non-major program) Federal Award Numbers and Years: H79TI081716, 2020; H79TI083316, 2021 Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: 2019-019 Questioned Costs: N/A Criteria: 45 CFR 75.303(d); 45 CFR 75.351; 45 CFR 75.352(b) and (d) Federal regulations require that pass-through entities evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining appropriate subrecipient monitoring activities. Monitoring activities should be completed based on the results of the subrecipient?s determined risk. Federal regulations also require grantees take prompt action when instances of noncompliance are identified in audit findings. The Health Systems Division of the Oregon Health Authority (department) developed a formal process for performing risk assessments to determine appropriate monitoring activities and developed a tool to document post award monitoring in March of 2020, and for three years, the department has pointed to these procedures as actions taken to partially correct the original 2019 finding. However, the department has yet to implement these or other procedures, and the Opioid program has no documented monitoring plan in place. Federal regulations require the department, as a pass-through entity, to determine if the recipients of disbursements of federal funds are subrecipients or contractors. The subrecipient and contractor determination will impact how program expenditures are reported on the Schedule of Expenditures of Federal Awards (SEFA). Out of 75 contracts with 59 subrecipients, we reviewed 15 contracts with 10 subrecipients and based on the contracts? listed deliverables, we determined five of them did not appear to meet the definition of a subrecipient. Department management could not support its subrecipient determinations and could not identify who made the decisions. As a result, the SEFA may incorrectly report $751,911 as pass-through funds instead of direct expenditures. We recommend department management comply with subrecipient monitoring requirements by implementing and documenting a procedure that evaluates each subrecipient?s risk of noncompliance for the purpose of determining and performing the appropriate monitoring for each subrecipient. We also recommend department management implement procedures to ensure federal subrecipient versus contractor determinations result in accurate reporting on the SEFA.
2022-048 Oregon Health Authority Improve review of federal performance progress reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.788 Opioid STR (Non-major program) Federal Award Numbers and Years: H79TI081716, 2020; H79TI083316, 2021 Compliance Requirement: Reporting Type of Finding: Significant Deficiency Prior Year Finding: 2019-020 Questioned Costs: N/A Criteria: 45 CFR 75.303(a); 45 CFR 75.342(b); Opioid STR Notice of Awards Federal regulations require performance progress reports (reports) be submitted semi-annually and include an overview of the goals and objectives accomplished during the funding period as stated in the grants? funding opportunity announcements. In addition, federal regulations require award grantees to establish and maintain effective internal control that provides reasonable assurance the award is managed in compliance with regulations and terms and conditions of the award. Effective controls may include review and approval of reports for completeness and accuracy. The Health Systems Division of the Oregon Health Authority (department) developed a tool to document post award monitoring in March of 2020, and for three years, the department has pointed to this tool as an action taken to ensure reports are complete and accurate. Although the department has yet to implement this tool, we found evidence of other internal controls that were partially implemented. Program now utilizes collaborative online software called Smartsheet which allows a contracted evaluator to compile subrecipient performance data the department can monitor and edit in real time. The department uses the Smartsheet as support for progress report data. We found some key data elements in the SOR2 year 2 progress report did not agree to support in Smartsheet. Program stated they reviewed a different spreadsheet supplied by the evaluator, not Smartsheet, which had totals agreeing to the submitted report. However, the department did not retain this additional spreadsheet. Without retaining the underlying support used for review, we are unable to assess the effectiveness of the department?s review of the report prior to submission. Program now requires manager review of reports prior to submission. We found evidence of manager review of the SOR2 year 2 progress report, however it was dated two days after the report was submitted. Ineffective controls could result in a misrepresentation of the grant?s performance. We recommend department management implement internal controls to ensure performance progress reports are complete and accurate prior to report submission.
2022-041 Oregon Health Authority Ensure expenditures of federal funds are recorded to the appropriate program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services (COVID-19), 93.959 Block Grants for Prevention and Treatment of Substance Abuse (COVID-19) Federal Award Numbers and Years: 93.958: 1B09SM083994, 1B09SM085378 (COVID-19); 93.959: 1B08TI083513, 1B08TI083963 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: 93.958 - $2,268,421 (known COVID-19) Criteria: 2 CFR 200.303; 42 USC 300x-1 The department was required to submit a spending plan documenting the intended use of the awarded COVID-19 funding allocations under the Mental Health Block Grant (MHBG) and Substance Abuse Block Grant (SABG). The expenditure of COVID-19 funding should align with each block grant?s approved spending plan. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the Federal award. Our testing of state fiscal year 2022 MHBG COVID-19 expenditures identified $10.4 million in workforce development incentive payments inappropriately recorded under the MHBG. Further inquiry into the payments revealed the department determined during state fiscal year 2023 these expenditures were not included in the MHBG COVID-19 spending plans and were not allowable activities under the MHBG. The department determined incentive payments totaling $8.1 million in COVID-19 expenditures should have been recorded under the SABG in accordance with the SABG COVID-19 spending plans. The department subsequently moved the $8.1 million of the combined $10.4 million total COVID-19 incentive payment expenditures to the SABG; however, the remaining $2.3 million in incentive payment expenditures were left in the MHBG as a funding source had yet to be determined. An adjustment to the Schedule of Expenditures of Federal Awards (SEFA) was required to move the $8.1 million in COVID-19 spending from the MHBG to SABG. The remaining $2.3 million is considered questioned costs under the MHBG. We recommend department management ensure controls are properly designed and implemented to record only allowable expenditures to the appropriate federal programs.
2022-042 Oregon Health Authority Ensure expenditures of federal funds are for allowed activities Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services Federal Award Numbers and Years: 1B09SM083823, 2021 Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: $525,272 (known) Criteria: 42 USC 300x-5(a)(3) Mental Health Block Grant (MHBG) funds may not be expended on the purchase, construction, or permanent improvement of any building or other facility other than minor remodeling. Substance Abuse and Mental Health Services Administration?s (SAMHSA) standard funding restriction guidance defines minor alterations and renovations as the lesser of 25% of the budget period or $150 thousand. Additionally, all minor alterations and renovations must be approved by SAMHSA. During our testing of MHBG subrecipient contracts entered into during state fiscal year 2022, we noted one contract included payment for the remodeling of an existing building owned by the subrecipient. A payment of $525,272 was processed in December 2021 for the remodeling expenses as specified in the contract's payment provisions. However, this amount exceeds SAMHSA's threshold for minor alterations and renovations and is not allowed under the MHBG. We recommend department management ensure controls are properly designed and implemented to record only allowable expenditures to the MHBG. We further recommend department management seek SAMHSA approval for minor alterations and renovations.
2022-043 Oregon Health Authority Implement controls to ensure subrecipients are appropriately identified and monitored Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.331; 45 CFR 75.352(b); 45 CFR 75.352(d) Federal regulations require pass-through entities to determine if the recipients of disbursements of federal funds are subrecipients or contractors. The subrecipient and contractor determination will impact which federal compliance requirements recipients are subject to and how program expenditures are reported on the Schedule of Expenditures of Federal Awards (SEFA). For recipients meeting the definition of a subrecipient, federal regulations require pass-through entities to evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining appropriate subrecipient monitoring activities. Monitoring activities should be completed based on the results of the subrecipient?s determined risk to ensure subawards are used appropriately. We reviewed the department?s classification of a sample of eight of 40 Mental Health Block Grant (MHBG) and 11 of 76 Substance Abuse Block Grant (SABG) recipients of federal funds. We judgmentally selected an additional 11 MHBG and 30 SABG recipients for review after our review of the initial sample of recipients identified inconsistencies in the classification of recipients. Based on the following inconsistencies identified in our review, it is unclear if the department correctly classified recipients as subrecipients or contractors and the related expenditures are reported accordingly. As a result, the SEFA may incorrectly report pass-through or direct expenditures. ? One recipient of MHBG funds and 13 recipients of SABG funds were classified as contractors by the department; however, other recipients providing the same services were classified as subrecipients. As they were identified as contractors, a SEFA correction of $1.4 million was made to report as direct expenditures rather than pass-through expenditures. ? Three recipients of MHBG funds and one recipient of SABG funds were classified as subrecipients by the department, but it was unclear if each met the definition of a subrecipient. ? One recipient of MHBG funds was classified as a contractor and appeared to meet the definition of a contractor; however, payments made to this recipient were recorded as pass-through expenditures. A SEFA correction of $329 thousand was made to report as direct expenditures rather than pass-through expenditures. ? One recipient of SABG funds was classified as neither contractor nor subrecipient. A SEFA correction of $215 thousand was made to report as direct expenditures rather than pass-through expenditures. We also inquired of the department?s risk assessment and monitoring activities for subrecipients. Based on our inquiries, the department does not have a formal implemented process for performing risk assessments to determine appropriate monitoring activities. Moreover, the department has not implemented a formal process to ensure subrecipients comply with federal regulations, terms and conditions of the subaward, and that subaward performance goals are achieved. If subrecipient monitoring is not performed and documented, subawards could be used for unauthorized purposes and performance goals not met. We recommend department management ensure recipients of federal funds are appropriately identified as subrecipients or contractors and the corresponding disbursement of federal funds are appropriately reported as direct or pass-through expenditures. We further recommend department management comply with subrecipient monitoring requirements, develop and implement internal controls to ensure risk assessments are performed and documented for each subrecipient, and monitoring activities are completed and documented according to risk assessment results.
2022-044 Oregon Health Authority Implement a consistent methodology for calculation of maintenance of effort Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness Prior Year Finding: N/A Questioned Costs: N/A Criteria: 42 USC 300x-2(a)(1)(C); 42 USC 300x-4(b)(1); 42 USC 300x-9(c)(1); 42 USC 300x-22(b)(1)(C); 42 USC 300x-30(a); 2 CFR 200.303 The Mental Health Block Grant and Substance Abuse Block Grant are subject to various Maintenance of Effort and Earmarking requirements. These requirements ensure the department meets minimum expenditure thresholds. Federal regulations require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Based on auditor recalculations, we determined the department was in compliance with the applicable Maintenance of Effort and Earmarking requirements during state fiscal year 2022. However, we noted the following control weaknesses in the department?s calculations and demonstration of their compliance with the requirements: ? The department is required to expend 10% of the federal award for early serious mental illness and a first episode psychosis treatment services under the Mental Health Block Grant. The 10% set aside is calculated and budgeted when federal awards are granted. However, tracking of expenditures is not performed to ensure compliance is achieved. ? The department is required to maintain state expenditures for community mental health services and authorized substance abuse activities at a level not less than the average expenditures of the prior two state fiscal years. The department is also required to ensure expenditures for systems of integrated services for children with serious emotional disturbance and substance abuse treatment for pregnant women and women with dependent children is not less than the amount expended for these services in fiscal year 1994. The applicable expenditures were not consistently or accurately calculated by the department in each of the state fiscal years included in the Maintenance of Effort determinations. Additionally, no written procedures exist for the calculations. The department is at risk of noncompliance without controls in place to help ensure expenditures are tracked and calculations are consistently applied across fiscal years. We recommend department management implement controls to ensure applicable expenditures are adequately tracked and calculations applicable to the maintenance of effort requirements are consistently performed across fiscal years. We further recommend department management work with the federal awarding agency to submit corrected maintenance of effort totals to ensure appropriateness of future maintenance of effort determinations.
2022-045 Oregon Health Authority Submit required FFATA reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements; 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases; 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.268: 5 NH23IP922626; 6 NH23IP922626; 93.323: 6 NU50CK000541; 93.958: 1B09SM083823, 2021; 93.959: 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department?s subawards subject to FFATA reporting during the audit period. We determined: ? Five of 30 Mental Health Block Grant (MHBG) subawards were not reported, totaling $4.2 million in obligations. ? 12 of 65 Substance Abuse Block Grant (SABG) subawards were not reported, totaling $6.2 million in obligations. ? Four of 37 Epidemiology and Laboratory Capacity (ELC) subawards were not reported, totaling almost $55.5 million in obligations. ? Five of 39 Immunization Cooperative Agreements subawards were not reported, totaling $6.3 million in obligations. Of the total not reported, one SABG, one ELC, and two Immunization subawards were not reported in the FSRS due to oversights in the department?s reporting process. The remaining unreported subawards resulted from the department?s suspension of FFATA reporting stemming from the federal replacement of the DUNS number with the Unique Entity Identifier (UEI) in May 2022. The department did not have UEI numbers for all subrecipients at the time of the replacement which prevented the department from submitting accurate reports. FFATA reporting was suspended through the end of state fiscal year 2022 and into the following state fiscal year. Although the department suspended FFATA reporting in the FSRS, a tracking spreadsheet was maintained that included all subaward award information needed for reporting once reporting is resumed. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management implement controls to ensure all subawards are appropriately tracked and reported.
2022-041 Oregon Health Authority Ensure expenditures of federal funds are recorded to the appropriate program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services (COVID-19), 93.959 Block Grants for Prevention and Treatment of Substance Abuse (COVID-19) Federal Award Numbers and Years: 93.958: 1B09SM083994, 1B09SM085378 (COVID-19); 93.959: 1B08TI083513, 1B08TI083963 (COVID-19) Compliance Requirement: Activities Allowed or Unallowed Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: 93.958 - $2,268,421 (known COVID-19) Criteria: 2 CFR 200.303; 42 USC 300x-1 The department was required to submit a spending plan documenting the intended use of the awarded COVID-19 funding allocations under the Mental Health Block Grant (MHBG) and Substance Abuse Block Grant (SABG). The expenditure of COVID-19 funding should align with each block grant?s approved spending plan. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal statutes, regulations, and terms and conditions of the Federal award. Our testing of state fiscal year 2022 MHBG COVID-19 expenditures identified $10.4 million in workforce development incentive payments inappropriately recorded under the MHBG. Further inquiry into the payments revealed the department determined during state fiscal year 2023 these expenditures were not included in the MHBG COVID-19 spending plans and were not allowable activities under the MHBG. The department determined incentive payments totaling $8.1 million in COVID-19 expenditures should have been recorded under the SABG in accordance with the SABG COVID-19 spending plans. The department subsequently moved the $8.1 million of the combined $10.4 million total COVID-19 incentive payment expenditures to the SABG; however, the remaining $2.3 million in incentive payment expenditures were left in the MHBG as a funding source had yet to be determined. An adjustment to the Schedule of Expenditures of Federal Awards (SEFA) was required to move the $8.1 million in COVID-19 spending from the MHBG to SABG. The remaining $2.3 million is considered questioned costs under the MHBG. We recommend department management ensure controls are properly designed and implemented to record only allowable expenditures to the appropriate federal programs.
2022-043 Oregon Health Authority Implement controls to ensure subrecipients are appropriately identified and monitored Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.331; 45 CFR 75.352(b); 45 CFR 75.352(d) Federal regulations require pass-through entities to determine if the recipients of disbursements of federal funds are subrecipients or contractors. The subrecipient and contractor determination will impact which federal compliance requirements recipients are subject to and how program expenditures are reported on the Schedule of Expenditures of Federal Awards (SEFA). For recipients meeting the definition of a subrecipient, federal regulations require pass-through entities to evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining appropriate subrecipient monitoring activities. Monitoring activities should be completed based on the results of the subrecipient?s determined risk to ensure subawards are used appropriately. We reviewed the department?s classification of a sample of eight of 40 Mental Health Block Grant (MHBG) and 11 of 76 Substance Abuse Block Grant (SABG) recipients of federal funds. We judgmentally selected an additional 11 MHBG and 30 SABG recipients for review after our review of the initial sample of recipients identified inconsistencies in the classification of recipients. Based on the following inconsistencies identified in our review, it is unclear if the department correctly classified recipients as subrecipients or contractors and the related expenditures are reported accordingly. As a result, the SEFA may incorrectly report pass-through or direct expenditures. ? One recipient of MHBG funds and 13 recipients of SABG funds were classified as contractors by the department; however, other recipients providing the same services were classified as subrecipients. As they were identified as contractors, a SEFA correction of $1.4 million was made to report as direct expenditures rather than pass-through expenditures. ? Three recipients of MHBG funds and one recipient of SABG funds were classified as subrecipients by the department, but it was unclear if each met the definition of a subrecipient. ? One recipient of MHBG funds was classified as a contractor and appeared to meet the definition of a contractor; however, payments made to this recipient were recorded as pass-through expenditures. A SEFA correction of $329 thousand was made to report as direct expenditures rather than pass-through expenditures. ? One recipient of SABG funds was classified as neither contractor nor subrecipient. A SEFA correction of $215 thousand was made to report as direct expenditures rather than pass-through expenditures. We also inquired of the department?s risk assessment and monitoring activities for subrecipients. Based on our inquiries, the department does not have a formal implemented process for performing risk assessments to determine appropriate monitoring activities. Moreover, the department has not implemented a formal process to ensure subrecipients comply with federal regulations, terms and conditions of the subaward, and that subaward performance goals are achieved. If subrecipient monitoring is not performed and documented, subawards could be used for unauthorized purposes and performance goals not met. We recommend department management ensure recipients of federal funds are appropriately identified as subrecipients or contractors and the corresponding disbursement of federal funds are appropriately reported as direct or pass-through expenditures. We further recommend department management comply with subrecipient monitoring requirements, develop and implement internal controls to ensure risk assessments are performed and documented for each subrecipient, and monitoring activities are completed and documented according to risk assessment results.
2022-044 Oregon Health Authority Implement a consistent methodology for calculation of maintenance of effort Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness Prior Year Finding: N/A Questioned Costs: N/A Criteria: 42 USC 300x-2(a)(1)(C); 42 USC 300x-4(b)(1); 42 USC 300x-9(c)(1); 42 USC 300x-22(b)(1)(C); 42 USC 300x-30(a); 2 CFR 200.303 The Mental Health Block Grant and Substance Abuse Block Grant are subject to various Maintenance of Effort and Earmarking requirements. These requirements ensure the department meets minimum expenditure thresholds. Federal regulations require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Based on auditor recalculations, we determined the department was in compliance with the applicable Maintenance of Effort and Earmarking requirements during state fiscal year 2022. However, we noted the following control weaknesses in the department?s calculations and demonstration of their compliance with the requirements: ? The department is required to expend 10% of the federal award for early serious mental illness and a first episode psychosis treatment services under the Mental Health Block Grant. The 10% set aside is calculated and budgeted when federal awards are granted. However, tracking of expenditures is not performed to ensure compliance is achieved. ? The department is required to maintain state expenditures for community mental health services and authorized substance abuse activities at a level not less than the average expenditures of the prior two state fiscal years. The department is also required to ensure expenditures for systems of integrated services for children with serious emotional disturbance and substance abuse treatment for pregnant women and women with dependent children is not less than the amount expended for these services in fiscal year 1994. The applicable expenditures were not consistently or accurately calculated by the department in each of the state fiscal years included in the Maintenance of Effort determinations. Additionally, no written procedures exist for the calculations. The department is at risk of noncompliance without controls in place to help ensure expenditures are tracked and calculations are consistently applied across fiscal years. We recommend department management implement controls to ensure applicable expenditures are adequately tracked and calculations applicable to the maintenance of effort requirements are consistently performed across fiscal years. We further recommend department management work with the federal awarding agency to submit corrected maintenance of effort totals to ensure appropriateness of future maintenance of effort determinations.
2022-045 Oregon Health Authority Submit required FFATA reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements; 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases; 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.268: 5 NH23IP922626; 6 NH23IP922626; 93.323: 6 NU50CK000541; 93.958: 1B09SM083823, 2021; 93.959: 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department?s subawards subject to FFATA reporting during the audit period. We determined: ? Five of 30 Mental Health Block Grant (MHBG) subawards were not reported, totaling $4.2 million in obligations. ? 12 of 65 Substance Abuse Block Grant (SABG) subawards were not reported, totaling $6.2 million in obligations. ? Four of 37 Epidemiology and Laboratory Capacity (ELC) subawards were not reported, totaling almost $55.5 million in obligations. ? Five of 39 Immunization Cooperative Agreements subawards were not reported, totaling $6.3 million in obligations. Of the total not reported, one SABG, one ELC, and two Immunization subawards were not reported in the FSRS due to oversights in the department?s reporting process. The remaining unreported subawards resulted from the department?s suspension of FFATA reporting stemming from the federal replacement of the DUNS number with the Unique Entity Identifier (UEI) in May 2022. The department did not have UEI numbers for all subrecipients at the time of the replacement which prevented the department from submitting accurate reports. FFATA reporting was suspended through the end of state fiscal year 2022 and into the following state fiscal year. Although the department suspended FFATA reporting in the FSRS, a tracking spreadsheet was maintained that included all subaward award information needed for reporting once reporting is resumed. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management implement controls to ensure all subawards are appropriately tracked and reported.
2022-046 Oregon Health Authority Ensure cash draws are made only for immediate cash needs Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 6B08TI083472, 2021 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 31 CFR 205.33 The Substance Abuse Block Grant is subject to federal cash management requirements. Federal regulations require the state minimize the time between the drawdown and disbursement of federal funds. The department?s normal draw procedure for the block grant is designed to request federal funds on a reimbursement basis. The amount to be drawn is calculated based on a comparison between previously drawn revenue amounts and program expenditures at the time of the draw. During our testing of a sample of three of the 15 cash draws performed during state fiscal year 2022, we identified an error in the calculation of a draw performed in April 2022 for the 2021 award. The process used to identify program revenues and expenditures for the draw calculation was incorrectly updated when the department transitioned to a new data analysis tool. As a result, the April 2022 draw requested $1 million in federal funds in excess of actual expenditures. The error in the query was not identified by the department through the end of the fiscal year. The total drawn on the award at the end of state fiscal year 2022 was in excess of expenditures by $847 thousand. Although the 2021 award was drawn in excess of expenditures at times after April 2022, the total revenues and expenditures were balanced at the close out of the award in December 2022. Additionally, according to Federal regulations no interest liability is incurred even though the draws were in excess of the immediate cash needs of operating the program. We recommend management ensure controls over the draw process are designed and implemented to review and identify calculation errors.
2022-043 Oregon Health Authority Implement controls to ensure subrecipients are appropriately identified and monitored Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness; Material Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.331; 45 CFR 75.352(b); 45 CFR 75.352(d) Federal regulations require pass-through entities to determine if the recipients of disbursements of federal funds are subrecipients or contractors. The subrecipient and contractor determination will impact which federal compliance requirements recipients are subject to and how program expenditures are reported on the Schedule of Expenditures of Federal Awards (SEFA). For recipients meeting the definition of a subrecipient, federal regulations require pass-through entities to evaluate each subrecipient?s risk of noncompliance with federal statutes, regulations, and the terms and conditions of the subaward for the purpose of determining appropriate subrecipient monitoring activities. Monitoring activities should be completed based on the results of the subrecipient?s determined risk to ensure subawards are used appropriately. We reviewed the department?s classification of a sample of eight of 40 Mental Health Block Grant (MHBG) and 11 of 76 Substance Abuse Block Grant (SABG) recipients of federal funds. We judgmentally selected an additional 11 MHBG and 30 SABG recipients for review after our review of the initial sample of recipients identified inconsistencies in the classification of recipients. Based on the following inconsistencies identified in our review, it is unclear if the department correctly classified recipients as subrecipients or contractors and the related expenditures are reported accordingly. As a result, the SEFA may incorrectly report pass-through or direct expenditures. ? One recipient of MHBG funds and 13 recipients of SABG funds were classified as contractors by the department; however, other recipients providing the same services were classified as subrecipients. As they were identified as contractors, a SEFA correction of $1.4 million was made to report as direct expenditures rather than pass-through expenditures. ? Three recipients of MHBG funds and one recipient of SABG funds were classified as subrecipients by the department, but it was unclear if each met the definition of a subrecipient. ? One recipient of MHBG funds was classified as a contractor and appeared to meet the definition of a contractor; however, payments made to this recipient were recorded as pass-through expenditures. A SEFA correction of $329 thousand was made to report as direct expenditures rather than pass-through expenditures. ? One recipient of SABG funds was classified as neither contractor nor subrecipient. A SEFA correction of $215 thousand was made to report as direct expenditures rather than pass-through expenditures. We also inquired of the department?s risk assessment and monitoring activities for subrecipients. Based on our inquiries, the department does not have a formal implemented process for performing risk assessments to determine appropriate monitoring activities. Moreover, the department has not implemented a formal process to ensure subrecipients comply with federal regulations, terms and conditions of the subaward, and that subaward performance goals are achieved. If subrecipient monitoring is not performed and documented, subawards could be used for unauthorized purposes and performance goals not met. We recommend department management ensure recipients of federal funds are appropriately identified as subrecipients or contractors and the corresponding disbursement of federal funds are appropriately reported as direct or pass-through expenditures. We further recommend department management comply with subrecipient monitoring requirements, develop and implement internal controls to ensure risk assessments are performed and documented for each subrecipient, and monitoring activities are completed and documented according to risk assessment results.
2022-044 Oregon Health Authority Implement a consistent methodology for calculation of maintenance of effort Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.958: 1B09SM082625, 2020; 1B09SM083823, 2021; 1B09SM086032, 2022; 93.959: 1B08TI083068, 2020; 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Matching, Level of Effort, Earmarking Type of Finding: Material Weakness Prior Year Finding: N/A Questioned Costs: N/A Criteria: 42 USC 300x-2(a)(1)(C); 42 USC 300x-4(b)(1); 42 USC 300x-9(c)(1); 42 USC 300x-22(b)(1)(C); 42 USC 300x-30(a); 2 CFR 200.303 The Mental Health Block Grant and Substance Abuse Block Grant are subject to various Maintenance of Effort and Earmarking requirements. These requirements ensure the department meets minimum expenditure thresholds. Federal regulations require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. Based on auditor recalculations, we determined the department was in compliance with the applicable Maintenance of Effort and Earmarking requirements during state fiscal year 2022. However, we noted the following control weaknesses in the department?s calculations and demonstration of their compliance with the requirements: ? The department is required to expend 10% of the federal award for early serious mental illness and a first episode psychosis treatment services under the Mental Health Block Grant. The 10% set aside is calculated and budgeted when federal awards are granted. However, tracking of expenditures is not performed to ensure compliance is achieved. ? The department is required to maintain state expenditures for community mental health services and authorized substance abuse activities at a level not less than the average expenditures of the prior two state fiscal years. The department is also required to ensure expenditures for systems of integrated services for children with serious emotional disturbance and substance abuse treatment for pregnant women and women with dependent children is not less than the amount expended for these services in fiscal year 1994. The applicable expenditures were not consistently or accurately calculated by the department in each of the state fiscal years included in the Maintenance of Effort determinations. Additionally, no written procedures exist for the calculations. The department is at risk of noncompliance without controls in place to help ensure expenditures are tracked and calculations are consistently applied across fiscal years. We recommend department management implement controls to ensure applicable expenditures are adequately tracked and calculations applicable to the maintenance of effort requirements are consistently performed across fiscal years. We further recommend department management work with the federal awarding agency to submit corrected maintenance of effort totals to ensure appropriateness of future maintenance of effort determinations.
2022-045 Oregon Health Authority Submit required FFATA reports Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.268 Immunization Cooperative Agreements; 93.323 Epidemiology and Laboratory Capacity for Infectious Diseases; 93.958 Block Grants for Community Mental Health Services; 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 93.268: 5 NH23IP922626; 6 NH23IP922626; 93.323: 6 NU50CK000541; 93.958: 1B09SM083823, 2021; 93.959: 6B08TI083472, 2021; 6B08TI084667, 2022 Compliance Requirement: Reporting Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 170 Appendix A; 2 CFR 200.303 Federal regulations require recipients of federal awards to report certain subaward information in the FFATA Subaward Reporting System (FSRS) for subawards meeting the criteria for reporting. Reports must be submitted no later than the end of the month following the month in which the subawards were made. Federal regulations also require recipients of federal awards establish and maintain internal controls designed to reasonably ensure compliance with federal laws, regulations, and program compliance requirements. We identified and reviewed the reporting status of all the department?s subawards subject to FFATA reporting during the audit period. We determined: ? Five of 30 Mental Health Block Grant (MHBG) subawards were not reported, totaling $4.2 million in obligations. ? 12 of 65 Substance Abuse Block Grant (SABG) subawards were not reported, totaling $6.2 million in obligations. ? Four of 37 Epidemiology and Laboratory Capacity (ELC) subawards were not reported, totaling almost $55.5 million in obligations. ? Five of 39 Immunization Cooperative Agreements subawards were not reported, totaling $6.3 million in obligations. Of the total not reported, one SABG, one ELC, and two Immunization subawards were not reported in the FSRS due to oversights in the department?s reporting process. The remaining unreported subawards resulted from the department?s suspension of FFATA reporting stemming from the federal replacement of the DUNS number with the Unique Entity Identifier (UEI) in May 2022. The department did not have UEI numbers for all subrecipients at the time of the replacement which prevented the department from submitting accurate reports. FFATA reporting was suspended through the end of state fiscal year 2022 and into the following state fiscal year. Although the department suspended FFATA reporting in the FSRS, a tracking spreadsheet was maintained that included all subaward award information needed for reporting once reporting is resumed. We recommend department management resume FFATA reporting as soon as feasible and ensure all necessary subawards are reported. We further recommend department management implement controls to ensure all subawards are appropriately tracked and reported.
2022-046 Oregon Health Authority Ensure cash draws are made only for immediate cash needs Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.959 Block Grants for Prevention and Treatment of Substance Abuse Federal Award Numbers and Years: 6B08TI083472, 2021 Compliance Requirement: Cash Management Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 31 CFR 205.33 The Substance Abuse Block Grant is subject to federal cash management requirements. Federal regulations require the state minimize the time between the drawdown and disbursement of federal funds. The department?s normal draw procedure for the block grant is designed to request federal funds on a reimbursement basis. The amount to be drawn is calculated based on a comparison between previously drawn revenue amounts and program expenditures at the time of the draw. During our testing of a sample of three of the 15 cash draws performed during state fiscal year 2022, we identified an error in the calculation of a draw performed in April 2022 for the 2021 award. The process used to identify program revenues and expenditures for the draw calculation was incorrectly updated when the department transitioned to a new data analysis tool. As a result, the April 2022 draw requested $1 million in federal funds in excess of actual expenditures. The error in the query was not identified by the department through the end of the fiscal year. The total drawn on the award at the end of state fiscal year 2022 was in excess of expenditures by $847 thousand. Although the 2021 award was drawn in excess of expenditures at times after April 2022, the total revenues and expenditures were balanced at the close out of the award in December 2022. Additionally, according to Federal regulations no interest liability is incurred even though the draws were in excess of the immediate cash needs of operating the program. We recommend management ensure controls over the draw process are designed and implemented to review and identify calculation errors.
2022-054 Department of Human Services/Oregon Health Authority Improve controls over payments for Medicaid clients Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.1(1); 2 CFR 200.400(a); 2 CFR 200.404; 42 CFR ? 433.32(a) Federal regulations only allow the Medicaid program to charge allowable program expenditures at the federal financial participation rate for various program costs at the time of payment for services provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to service providers through the Jsystems system. We randomly sampled 61 clients and one Medicaid service payment associated with each client using a statistically valid sample. We reviewed agency documentation to test compliance with the Activities Allowed or Unallowed & Allowable Cost requirements. For 1 client, we found the issues described below. ? The claim selected as our sample item did not have mileage accurately calculated, which resulted in an overpayment. Further review of payments for this client identified additional inaccurate payments during the fiscal year for mileage to this provider. Questioned costs identified for our sample item resulted in an overpayment of $6.00 and other identified questioned costs resulted in an underpayment of ($5.27). The above issues occurred due to human error when entering mileage into the state payment system from the home care worker mileage tracking software (OR-PTC), which lead to improper payments. Phase 1 of the OR-PTC system was implemented in September of 2021. During this phase of the implementation branches must run a report of mileage claims and enter these claims manually into the payment system. Due to the exceptions noted above, we reviewed all clients within our sample for the fiscal year which had mileage entered into the OR-PTC system and identified multiple additional underpayments and overpayments that resulted in an overall underpayment of ($49.07). Due to the systemic nature of this issue, we are unable to reasonably estimate or quantify remaining potential questioned costs outside of our sample population. We recommend department and authority management strengthen controls over the OR-PTC system to ensure transactions are adequately supported and reviewed.
2022-055 Department of Human Services/Oregon Health Authority Strengthen review over direct costs charged to the program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,942 (known) Criteria: 2 CFR 200.1(1); 2 CFR 200.400(a); 2 CFR 200.404; 42 CFR ? 433.32(a) Federal regulations only allow the Medicaid program to charge allowable program expenditures at the federal financial participation rate for various program costs at the time of payment for services provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to vendors other than providers through the state?s accounting system. We judgmentally selected payments to 28 vendors for our review. We identified the following 2 errors, which were not identified during their review process, that resulted in improper payment of Medicaid expenditures: ? Payments to one vendor charged expenditures related to a specific project unrelated to the Medicaid program, resulting in known federally funded questioned costs of $1,361. ? For one payment management was unable to provide a contract or support for bids collected for the project charged to the Medicaid program, resulting in known federally funded questioned costs of $46,581. The above issues occurred due to human error and inadequate record maintenance which could lead to unallowed activities/costs being charged to the Medicaid program. We recommend department and authority management strengthen controls over review to ensure transactions are adequately supported and reviewed. Additionally, we recommend the authority reimburse the federal agency for unallowable costs.
2022-056 Department of Human Services/Oregon Health Authority Return questioned costs related to 2019-014 audit finding Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 1805OR5MAP, 2018; 1805OR5ADM, 2018; 1905OR5MAP, 2019; 1905OR5ADM, 2019 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Noncompliance Prior Year Finding: 2019-014 Questioned Costs: $348,080 (known) Criteria: 42 CFR 433.32(a); 42 CFR 433.312(a); 42 CFR 447.45(f)(1)(iv) During our testing for the fiscal year 2019 we noted that the MMIS data tables did not agree to the rates established by CMS for 2 procedures codes. Using incorrect rates resulted in an overpayment of $348,080 to providers. This overpayment was first reported in the fiscal year-end June 30, 2019, Secretary of State audit report number 2020-14, finding number 2019-014. As of January 1, 2020, management updated the MMIS data tables to ensure all future provider payments were made at the correct rate. Additionally, management updated control procedures to ensure MMIS data tables are updated timely and accurately. However, as of May 1, 2023, the overpayment to providers has not been collected, federal funds have not been returned, and the planned repayment method has not been approved by CMS. Per authority management they plan to let these overpayments run through their cost settlement process which would be an unusual method to return federal funds. We recommend authority management reimburse the federal agency for unallowable costs.
2022-057 Department of Human Services/Oregon Health Authority Improve documentation for provider eligibility determinations and revalidations Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Special Tests and Provisions Type of Finding: Significant Deficiency Prior Year Finding: 2021-020 Questioned Costs: N/A Criteria: 42 CFR 455.436; 42 CFR 455.102 to 455.107; 42 CFR 455.414 Provider eligibility requirements for the Medicaid program differ depending upon the type of services provided; however, all providers are subject to specified database checks and are required to sign an adherence to federal regulations agreement (agreement). Typically, the agreement includes disclosures specifically required by federal regulations. Additionally, the federal regulations require that the Oregon Health Authority (authority) and Department of Human Services (department) determine eligibility for Medicaid providers and revalidate providers at least every five years by performing database checks to ensure providers are still eligible to participate in the Medicaid program. We selected a random sample of 62 providers in the Medicaid program with 32 providers enrolled by the authority and 30 enrolled by the department. For 4 providers we found the issues described below. ? I-9 form for 1 department provider could not be located. This provider is not currently a provider with the State and an updated I-9 will not be obtained. Based on our review of other available support we were able to determine this to be an eligible provider during the fiscal year. ? I-9 form for 1 department provider could not be located. The department has since obtained a completed I-9 form. ? I-9 forms for 2 department providers did not include a review of minimum acceptable documents to verify identity and employment authorization. The department is actively working to obtain missing documentation and based on our review of other available support we were able to determine these to be eligible providers during the fiscal year. The above issues occurred due to human error and inadequate record maintenance which could lead to ineligible providers receiving Medicaid funding. We recommend department management strengthen controls to ensure documentation supporting a provider?s eligibility determination and revalidation is complete.
2022-054 Department of Human Services/Oregon Health Authority Improve controls over payments for Medicaid clients Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: N/A Criteria: 2 CFR 200.1(1); 2 CFR 200.400(a); 2 CFR 200.404; 42 CFR ? 433.32(a) Federal regulations only allow the Medicaid program to charge allowable program expenditures at the federal financial participation rate for various program costs at the time of payment for services provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to service providers through the Jsystems system. We randomly sampled 61 clients and one Medicaid service payment associated with each client using a statistically valid sample. We reviewed agency documentation to test compliance with the Activities Allowed or Unallowed & Allowable Cost requirements. For 1 client, we found the issues described below. ? The claim selected as our sample item did not have mileage accurately calculated, which resulted in an overpayment. Further review of payments for this client identified additional inaccurate payments during the fiscal year for mileage to this provider. Questioned costs identified for our sample item resulted in an overpayment of $6.00 and other identified questioned costs resulted in an underpayment of ($5.27). The above issues occurred due to human error when entering mileage into the state payment system from the home care worker mileage tracking software (OR-PTC), which lead to improper payments. Phase 1 of the OR-PTC system was implemented in September of 2021. During this phase of the implementation branches must run a report of mileage claims and enter these claims manually into the payment system. Due to the exceptions noted above, we reviewed all clients within our sample for the fiscal year which had mileage entered into the OR-PTC system and identified multiple additional underpayments and overpayments that resulted in an overall underpayment of ($49.07). Due to the systemic nature of this issue, we are unable to reasonably estimate or quantify remaining potential questioned costs outside of our sample population. We recommend department and authority management strengthen controls over the OR-PTC system to ensure transactions are adequately supported and reviewed.
2022-055 Department of Human Services/Oregon Health Authority Strengthen review over direct costs charged to the program Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Significant Deficiency; Noncompliance Prior Year Finding: N/A Questioned Costs: $47,942 (known) Criteria: 2 CFR 200.1(1); 2 CFR 200.400(a); 2 CFR 200.404; 42 CFR ? 433.32(a) Federal regulations only allow the Medicaid program to charge allowable program expenditures at the federal financial participation rate for various program costs at the time of payment for services provided. The Department of Human Services (department) and the Oregon Health Authority (authority) make payments to vendors other than providers through the state?s accounting system. We judgmentally selected payments to 28 vendors for our review. We identified the following 2 errors, which were not identified during their review process, that resulted in improper payment of Medicaid expenditures: ? Payments to one vendor charged expenditures related to a specific project unrelated to the Medicaid program, resulting in known federally funded questioned costs of $1,361. ? For one payment management was unable to provide a contract or support for bids collected for the project charged to the Medicaid program, resulting in known federally funded questioned costs of $46,581. The above issues occurred due to human error and inadequate record maintenance which could lead to unallowed activities/costs being charged to the Medicaid program. We recommend department and authority management strengthen controls over review to ensure transactions are adequately supported and reviewed. Additionally, we recommend the authority reimburse the federal agency for unallowable costs.
2022-056 Department of Human Services/Oregon Health Authority Return questioned costs related to 2019-014 audit finding Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 1805OR5MAP, 2018; 1805OR5ADM, 2018; 1905OR5MAP, 2019; 1905OR5ADM, 2019 Compliance Requirement: Activities Allowed or Unallowed; Allowable Costs/Cost Principles Type of Finding: Noncompliance Prior Year Finding: 2019-014 Questioned Costs: $348,080 (known) Criteria: 42 CFR 433.32(a); 42 CFR 433.312(a); 42 CFR 447.45(f)(1)(iv) During our testing for the fiscal year 2019 we noted that the MMIS data tables did not agree to the rates established by CMS for 2 procedures codes. Using incorrect rates resulted in an overpayment of $348,080 to providers. This overpayment was first reported in the fiscal year-end June 30, 2019, Secretary of State audit report number 2020-14, finding number 2019-014. As of January 1, 2020, management updated the MMIS data tables to ensure all future provider payments were made at the correct rate. Additionally, management updated control procedures to ensure MMIS data tables are updated timely and accurately. However, as of May 1, 2023, the overpayment to providers has not been collected, federal funds have not been returned, and the planned repayment method has not been approved by CMS. Per authority management they plan to let these overpayments run through their cost settlement process which would be an unusual method to return federal funds. We recommend authority management reimburse the federal agency for unallowable costs.
2022-057 Department of Human Services/Oregon Health Authority Improve documentation for provider eligibility determinations and revalidations Federal Awarding Agency: U.S. Department of Health and Human Services Assistance Listing Number and Name: 93.777 and 93.778 Medicaid Cluster Federal Award Numbers and Years: 2105OR5MAP, 2021; 2105OR5ADM, 2021; 2205OR5MAP, 2022; 2205OR5ADM, 2022 Compliance Requirement: Special Tests and Provisions Type of Finding: Significant Deficiency Prior Year Finding: 2021-020 Questioned Costs: N/A Criteria: 42 CFR 455.436; 42 CFR 455.102 to 455.107; 42 CFR 455.414 Provider eligibility requirements for the Medicaid program differ depending upon the type of services provided; however, all providers are subject to specified database checks and are required to sign an adherence to federal regulations agreement (agreement). Typically, the agreement includes disclosures specifically required by federal regulations. Additionally, the federal regulations require that the Oregon Health Authority (authority) and Department of Human Services (department) determine eligibility for Medicaid providers and revalidate providers at least every five years by performing database checks to ensure providers are still eligible to participate in the Medicaid program. We selected a random sample of 62 providers in the Medicaid program with 32 providers enrolled by the authority and 30 enrolled by the department. For 4 providers we found the issues described below. ? I-9 form for 1 department provider could not be located. This provider is not currently a provider with the State and an updated I-9 will not be obtained. Based on our review of other available support we were able to determine this to be an eligible provider during the fiscal year. ? I-9 form for 1 department provider could not be located. The department has since obtained a completed I-9 form. ? I-9 forms for 2 department providers did not include a review of minimum acceptable documents to verify identity and employment authorization. The department is actively working to obtain missing documentation and based on our review of other available support we were able to determine these to be eligible providers during the fiscal year. The above issues occurred due to human error and inadequate record maintenance which could lead to ineligible providers receiving Medicaid funding. We recommend department management strengthen controls to ensure documentation supporting a provider?s eligibility determination and revalidation is complete.