Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-004 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Coronavirus Relief Fund (Assistance Listing #21.019) Federal Award Numbers: Not Applicable Federal Award Year: 2020 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency Prior Year Finding: 2021-011 Statistically Valid Sample: No Criteria A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.331(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.331(b)); and 3. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, 2 CFR section 200.303(a) states that non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition Under the Coronavirus Relief Fund Program (CRF), the State of New Hampshire (the State) entered into various grant agreements with a third parties to provide program services under the CRF program. As part of our testwork over the subrecipient monitoring process, we noted the following breakdown of internal controls: A. The State communicates award information to the subrecipient through the approved grant agreement. During our testwork over the communication of award information, we noted instances where the State did not communicate all the required award information as outlined in 2 CFR section 200.331. Specifically, we noted the following: a. The indirect cost rate for the federal award, including if the de minimis rate is charged, was not included in each of the 7 grant agreements selected for testwork. b. Identification of whether the award is R&D was not included in 2 of 7 grant agreements selected for testwork. B. For 5 of 7 subrecipients selected for testwork, there was no evidence provided that a risk assessment had been performed for the subrecipient. While a risk assessment was not performed, we noted that for all 7 subrecipients selected for testwork that the State performed during the award monitoring procedures. C. The State did not appear to have policies and procedures over internal controls in place to determine if a subrecipient had a Uniform Guidance report if the amount awarded to the subrecipient under the CRF program was under the audit threshold of $750,000. Based on our independent review of uniform guidance submissions within the Federal Audit Clearinghouse, none of the 7 subrecipients selected for testwork had a submitted uniform guidance report, and as such, a management decision letter would not have been required to be submitted for the each of the 7 subrecipients. Cause The cause of the condition found is due to insufficient policies and internal controls to ensure that grant agreements contain the appropriate award notification information, that documented risk assessments are performed and that a comprehensive review to determine if subrecipients had a uniform guidance submitted regardless of the amount awarded under this federal award. Effect The effect of the condition found is that the State did not have sufficient internal controls in place in accordance with 2 CFR section 200.303(a)) and 200.332.(a). In addition, subrecipients could have had a uniform guidance report issued in which a management decision letter needed to be issued but as the Department does not evaluate this for subrecipient?s that were not granted more than $750,000, they would not be able to recognize the need for a management decision letter timely. Questioned Costs None. Recommendation We recommend that the State review its existing internal controls, policies, and procedures to ensure that the State complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b), and 2 CFR section 200.251. This would include ensuring that: 1. All required award information is communicated to subrecipients; 2. Documented risk assessments are performed over all subrecipients; and 3. All subrecipients are reviewed regardless of amount awarded to determine if a uniform guidance report was issued and if a management decision letter should be issued. View of Responsible Officials The State concurs in part with the findings and concurs in part with the recommendations. Given that CARES Act CRF is a funding source that is no longer eligible for use because program obligations were required to be entered into by December 31, 2021, and program expenditures complete by September 30, 2022, there are no ongoing CRF funded projects or programs. As a result, any corrective actions would relate to ensuring any other federal funding sources are achieving compliance requirements. With regard to condition A, the State partially concurs. Federal guidance concerning CARES Act CRF did not allow for charging indirect costs. That guidance indicated ?Payments from the Fund are not administered as part of a traditional grant program and the provisions of the Uniform Guidance, 2 CFR part 200, that are applicable to indirect costs do not apply. Recipients may not apply their indirect costs rates to payments received from the Fund.? Thus, awardees and recipients of funds were not permitted to charge indirect costs against CARES Act CRF. However, the state acknowledges inclusion of language specifically acknowledging the disallowance of indirect costs could have been included in the agreements. With regard to condition B, the State concurs. The four identified subrecipients were awardees of a program that was facilitated at the very end of CARES Act CRF eligibility for the period of performance. This program was run due to updated guidance by U.S. Treasury on December 14, 2021, that extended the deadline for expenditure of funds so long as obligations were entered into by December 31, 2021. That program largely resulted in direct beneficiary awards, but due to the nature of some expenditures awarded some entities received a subaward. Those subawards identified a brief timeline for project completion, between December 2021 and September 2022. Most projects were completed in February and March, with two of the subrecipients finalizing projects in September. Given the nature and timing of the program, those subawardees were closely monitored and regularly interacted with the State in order to receive reimbursement for eligible expenses and complete projects. The State can provide documentation of that monitoring and expense review. However, formal risk assessments were not initially done for those entities. Since then, the State has implemented policies and procedures that help ensure risk assessments are completed for all subrecipients, regardless of the nature of the program. With regard to condition C, the State concurs and has already implemented corrective actions to ensure procedures and policies are in place concerning Uniform Guidance Report review and the issuance of any necessary management decision letters to the extent required and where this deficiency could impact any other sources of federal funding. It is worth noting that the State in most cases has timely conducted risk assessments of subrecipients and reviewed relevant Uniform Guidance Reports, but its corrective action will result in better documentation of that process and protocol. Anticipated Completion Date: The corrective actions indicated above have already been implemented as of the date of this response. Contact Person: Steve Giovinelli and Chase Hagaman
Finding Reference Number: 2022-005 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Emergency Rental Assistance Program (Assistance Listing #21.023) Federal Award Numbers ERA0012-ERA0435, ERAE0119 Federal Award Year: 2020 U.S. Department of Treasury Compliance Requirement: Reporting and Special Tests and Provisions ? ERA 1 Funds Redirection Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria The financial information certified as part of reallocation includes monthly expenditure and cumulative obligations levels, as described in the Treasury reallocation guidance. ERA 1 expenditures reported monthly by the grantee are inputs to Treasury?s reallocation expenditure ratio. ERA1 obligations certified in the Request for Reallocated Funds form (1505-0266), including in the Request for Voluntarily Reallocated Funds, are inputs into determining eligibility to receive reallocated funds. ERA 2 expenditures and obligations reported in quarterly reports by the grantee are inputs to Treasury?s ERA 2 reallocation expenditure and obligation ratios. The reallocation expenditure ratio determines whether the grantee is subject to involuntary reallocation due to an insufficient ratio and the amount of excess funds subject to recapture by Treasury. Auditors should confirm the amounts reported as expended and obligated accurately capture the grantee?s housing activity at the time of submission, as reflected in a grantee?s award and/or financial systems, and that grantees receiving reallocated funds met the Treasury criteria. All ERA grantees must submit quarterly reports with reporting periods of one calendar quarter and several cumulative fields covering all activity from the date of award through the quarter close. These reports provide financial and performance data regarding grantee administration of their ERA projects and capture program design in addition to program status data elements. Quarterly reports are intended to capture standard financial and performance data, as well as detailed information on qualifying direct and indirect expenditures pursuant to the government-wide Federal Funding Accountability and Transparency Act (FFATA) reporting requirements and in accordance with Section 15011 of the CARES Act, as amended and interpreted in Treasury?s reporting and compliance guidance on Treasury.gov. 2 CFR section 334 required financial records, statistical records and all other non-federal entity records pertinent to a federal award to be retained for a period of 3 years from the date of submission of the final expenditure report. The two Monthly Reporting questions are included in the information collection for the Interim Quarterly Reports. Beginning with the monthly report for the April 1 through April 30, 2021, period of performance for ERA 1 generally due to Treasury by May 15, 2021, state, local and territorial grantees receiving ERA 1 awards submit monthly reports. For ERA 2, monthly reporting began with the June 1 through June 30, 2021 period of performance and reports were due to Treasury by July 15, 2021, or where otherwise extended in an approved authorization from EmergencyRentalAssistance@Treasury.gov. Grantees receiving ERA 1 and ERA 2 allocations later in the award cycle as evidenced by award or reallocation dates are not required to submit reports for periods not covered by the assistance agreement. Additionally, 2 CFR section 200.303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our testwork over reporting and special tests and provisions, we noted the following: A. On a quarterly basis the New Hampshire Governor?s Office of Emergency Relief and Recovery (the Office) submits the required 1505-0266 quarterly federal reporting through the U.S. Treasury (Treasury) reporting portal. During our testwork over the quarterly reporting process, for 2 of 4 quarterly reports selected for testwork, we were unable to review a copy of the report submitted or the related supporting documentation and evidence of review and approval of the reports. As a result, we were unable to verify if the federal reports were complete and accurately submitted and properly approved in accordance with management?s internal control policies. B. On a monthly basis, the Office submits required federal reports to Treasury that are used by Treasury as part of its reallocation process. To compile the federal report, the Office obtains from its subrecipient the number of participating households that receive ERA assistance of any kind and the total amount of ERA funds expended by the ERA grantee to or for participating households on behalf of eligible households. During our review over the compilation of the monthly report, we noted that the Office does not perform any documented review procedures over the data submitted by the subrecipient to ensure the data is complete and accurate before the reports are submitted. As a result, while the monthly reports agreed to the data provided by the subrecipient, we are not able to determine if the data provided by the subrecipient was complete and accurate. Cause The cause of the condition found related to the quarterly reports was due to the Office not having policies and procedures to ensure that a copy of the federal report submitted is maintained along with the documentation to support the amounts reported and evidence that the report was reviewed and approved prior to submission. The Office anticipated being able to access the information directly from the US Treasury reporting portal however, changes were subsequently made to the portal that no longer allows the Office to download and view the report and related report data for prior quarters. The US Treasury did make changes to its portal in late March of 2023 which allowed the Office to access its prior issued reports but there was insufficient time for the auditor to test the accuracy of these reports. The cause of the condition found related to the monthly reports was due to the Office does not having formal procedures to document at a precision level evidence of review of the data, including the key line items, provided by the subrecipient. Per inquiry of management, we noted that the Office meets weekly with the subrecipient and as part of these meetings, the related data used for reporting purposes is discussed. However, there is no evidence such as meeting minutes or agendas maintained to validate that this review occurred at an appropriate precision level. Effect The effect of the condition found is that the Office submit quarterly and monthly reports that are used in the reallocation process that may not be complete and accurate. Data included within the quarterly reports include cumulative amount obligated by the grantee and the cumulative amount expended by the grantee may not be complete and accurate. Data included within the monthly reports include key line items as the Treasury?s guidance to qualify for receiving a reallocation payment for ERA 1 and grantees are subject to returning funds under reallocation where their expenditure for ERA 1 is less than the requirement in effect at the time, as detailed in the Treasury?s reallocation guidance. Questioned Costs None. Recommendation We recommend that the Office develop and implement written policies and procedures over the federal reporting process that includes: 1. Instructions on how to maintain and store filed reports and supporting documentation so that it is retained for its records. In addition to the retention of the report, the Office should also maintain written documentation of its process over reviewing the report for completeness and accuracy prior to submission to the federal government. 2. Written policies and procedures over its review of data submitted by the subrecipient that is utilized as the basis of federal reports to ensure that the data utilized is complete and accurate. The Office should ensure that its policies and procedures include guidelines that describe how the review is to be performed and documented to provide evidence that the review of the data has been completed. View of Responsible Officials Quarterly Reporting The State concurs in part with the condition and recommendation. A unique challenge with ERA reporting has been changes in the U.S. Treasury portal for that program, which have impacted the State?s ability to download and provide copies of past reports that have been submitted. In addition, this issue in the reporting portal has been inconsistent, as some previously submitted reports were made accessible by Treasury, while others were not, which resulted in the State being able to access some requisite materials but not others. The State did not have documented procedures to ?pull down? copies of reports it had submitted to Treasury because the State has otherwise been able to rely on access to its previously submitted reports within reporting portals in order to enable the testing required during audit for the relevant periods. Meaning, in the State?s experience with COVID-19 related federal funds reporting, it has been able to access and download past reports for purposes of audit. However, also noted above is that the Treasury portal was recently revised and updated to allow for accessing previously submitted ERA reports that were not otherwise available (the communication from Treasury acknowledging this change was provided by the State). However, the reporting portal change did not take place in time for the State?s auditors to reasonably conduct the necessary testing. The State did provide the data and materials it reported to Treasury for the relevant periods, but auditors were unable to test and validate that data because the State could not access and provide a copy of what was actually uploaded into the portal. Nevertheless, to avoid any such potential issues in the future, the State has already implemented a procedure that involves downloading copies of reports as soon as they are submitted and taking screenshots of portions of the portal where perceived necessary to support what the State has submitted to Treasury. This updated procedure will be memorialized in the program?s transaction processing memo during its next update. Monthly Reporting The State concurs in part but has already implemented related corrective action in line with the recommendation above. The State would also like to note that as part of the ERA reallocation process U.S. Treasury has relied on both quarterly and monthly reporting, and that the State has continued to engage in thorough monitoring of its subrecipient and receives regular reports from that subrecipient, including weekly, biweekly, and quarterly data, which also includes quality control reports. This is inclusive of the monthly reports that were required by U.S. Treasury at one time but no longer are. The State reviews and then discusses reports received at standing, calendared, weekly meetings with the subrecipient and often engages in e-mail correspondence concerning those reports, especially if any questions concerning the data provided arise. However, the State has acknowledged that its documentation of those weekly conversations needed to be more formally memorialized. During the current fiscal year, the State began providing agendas and summaries of topics discussed during the weekly check-ins and will ensure that the program?s transaction processing memo adequately documents this requirement and procedure. The very nature of this program and U.S. Treasury?s facilitation of it has required the State and its subrecipient to stay in close contact, make regular decisions on strategies and policies within the program, and closely consider data relative to it. Anticipated Completion Date Quarterly reporting - Corrective action relative to acquisition of submitted federal reports has already been implemented and this revised procedure will be memorialized in the transaction processing memo for the program during its next update in Q1 2023. Monthly Repotting - Corrective action relative to documentation of weekly meetings was already complete as of the State?s response to this finding, and the State will ensure that the transaction processing memo for the program reflects these measures during its next update in Q1 2023. Contact Person Chase Hagaman, Lisa Cota-Robles, and Emily Larson
Finding Reference Number: 2022-006 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Homeowners Assistance Fund Program (Assistance Listing #21.026) Federal Award Numbers: HAFP-0190 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Cash Management Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1)). Additionally, 2 CFR section 200.303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The State of New Hampshire Governor?s Office of Emergency Relief and Recovery (the Office) entered into a subrecipient grant agreement whereby the subrecipient is responsible for determining benefit eligibility as well as calculating the benefit amount that the participant is eligible to receive. During the year ended June 30, 2022, the Department passed through $49,250,000 to its subrecipient. Funds paid under this program were authorized to be paid in advance through a series of executive orders by the Governor?s Office to the subrecipient. While the Office properly advanced the funds, they did not monitor or assess at the time of payment what the subrecipient?s cash needs were to ensure that the Office sufficiently minimized the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes for each of the 2 transactions selected for testwork. Cause The cause of the condition found is that the Office was authorized through executive orders to issue the advance payments to the subrecipient. Given this authorization, the Office management do not consider minimizing the time elapsing between the transfer of federal funds to the subrecipient and their disbursement compliance. Per inquiry of management, we noted that the Office meets weekly with the subrecipient and as part of these meetings, cash on hand at the subrecipient level is discussed. However, there is no evidence such as meeting minutes or agendas maintained to validate that this review occurred at an appropriate precision level. Effect The effect of the condition found is that the subrecipient could have excess cash on hand as the Office did not minimize the time elapsing between the transfer of federal funds to the subrecipient and their disbursement of funds for program purposes. Questioned Costs None. Recommendation We recommend that the Office develop and implement written policies and procedures relating to advancing funds to subrecipients to ensure that excess cash on hand at the subrecipient does not exceed 30 days and that its review over excess cash on hand is properly documented to provide evidence that it has been reviewed. View of Responsible Officials The State concurs in part with the premise of the findings identified, but it does not concur with the characterization of the Governor?s Office for Emergency Relief and Recovery (GOFERR), the process for authorizing the relevant subaward and relevant amendments, the nature of the subaward and amendments, or the recommended corrective action. Moreover, the full $49,250,000 identified in the finding was not provided to the subrecipient in one lump sum. The State was allocated $50,000,000 from U.S. Treasury for the purposes of designing and facilitating the State?s HAF program. The State received $5,000,000 from U.S. Treasury up front and received the remainder after approval of the State?s planned program. As a result, the State?s subrecipient received an initial subaward for administrative and planning purposes from within the initial $5,000,000 delivered to the State. The subrecipient was advanced only a portion of those initial funds and then was provided the remainder upon request and justification. A subsequent amendment to that subaward provided additional funds to the subrecipient as needed for the same purpose and as part of the U.S. Treasury required process of designing and then attaining approval for the State?s HAF program. The State ultimately received approval from U.S. Treasury for the State?s HAF program plan, which is a complex multi-faceted program that provides various forms of assistance to homeowners, and then received approval from State officials to launch the program. The State?s program is run entirely through a single subrecipient, New Hampshire Housing Finance Authority, which is the only entity of its kind as a statewide housing authority. This subrecipient facilitates a variety of larger-scale, federally funded housing programs. While developing the State?s HAF program and as it neared the launch date, the State began receiving preapplications through its subrecipient. Additionally, during this time, the State was facilitating its Emergency Rental Assistance (ERA) program, which has provided assistance to renters as opposed to homeowners and is facilitated by the same subrecipient of the State. Within the context of having received nearly 200 preapplications for the HAF program and witnessing a heavy and increasing demand in the rental assistance program, the decision was made to advance the remainder of the State?s HAF allocation ($45,000,000) to its subrecipient in order to provide prompt and adequate assistance, believing the program would experience high demand at the outset and funding shortfalls would be problematic for its success. Moreover, the amount of funds provided to the subrecipient was consistent with past advances to the same subrecipient under the ERA program, and as with prior delivery of funds, the subrecipient placed the funds in an appropriate account. However, demand for assistance did not unfold as anticipated due to the features of the program and the areas of need ultimately demonstrated by applicants after review and processing of initial applications. As part of the State?s monitoring protocols, and in part because of a lower initial expenditure rate than expected, the subrecipient began providing biweekly reports on the usage of funds, which the State has used as a measure of cash on hand. Moreover, the State also engages in standing, calendared, weekly calls with the subrecipient to discuss these reports. The State has provided documentation to support the process outlined above as well. Finally, as a result of the State?s remaining HAF allocation having already been provided to the subrecipient, the recommended corrective action is not feasible. However, the State acknowledges the need to more formally memorialize its review of the subrecipient?s cash on hand. As a result, the biweekly reports received and reviewed by the State will now include a specific section providing such information; review and discussion of that data will be incorporated into the weekly calls with the subrecipient, and the process and protocols will be documented in the State?s transaction processing memo for the program. Corrective Action Incorporation of cash on hand related data in biweekly reports received and reviewed by the State, documentation of that review as part of the weekly calls with subrecipient, and memorialization of the process and protocols in the State?s transaction processing memo for its HAF program. Anticipated Completion Date: Cash on hand data into biweekly reports and documentation of review said data as part of weekly calls with the subrecipient is being is actively being incorporated as of this response. The State will ensure that the transaction processing memo is updated with the requisite processes and protocols during the next update before the end of Q1 2023. Contact Persons: Chase Hagman, Lisa Cota-Robles, and Michele Zangri-Crean
Finding Reference Number: 2022-007 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Homeowners Assistance Fund Program (Assistance Listing #21.026) Federal Award Numbers: HAFP-0190 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must: 1. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 2. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, 2 CFR section 200.303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The New Hampshire Governor?s Office of Emergency Relief and Recovery (the Office) entered into a subrecipient grant agreement whereby the subrecipient is responsible for determining benefit eligibility as well as calculating the benefit amount that the participant is eligible to receive. During the year ended June 30, 2022, the Department passed through $49,250,000 to its subrecipient. As part of our testwork over the subrecipient monitoring process, we noted the following: A. The Office obtains bi-weekly reports from the subrecipient that provides information related to cumulative cases, status of the case as well as geographic data surrounding the counties assisted. We selected 1 of the 3 bi-weekly reports received by the Office and noted that while the report was received, there was no documented evidence to support that the Office had reviewed the report as part of its monitoring procedures. B. The subrecipient has a quality control process in place whereby it selects samples of cases to ensure that the eligibility determination for the case was appropriate and there is appropriate documentation to substantiate the amount paid to the participant. The subrecipient submits a QC report to the Office summarizing the results of the review, including any items that require corrective action. We selected 2 of the 4 QC reports received by the Office during the audit period and noted that while the QC reports were received by the Office, there was no documented evidence to support that the Office had reviewed the QC report as part of its monitoring process. C. The Office obtains and reviews the subrecipients uniform guidance report on an annual basis. The Office currently does not have a process in place to track the date in which the audit report was reviewed. As such, we were unable to determine if the Office reviewed the uniform guidance report timely. Per review of the subrecipient uniform guidance report, there were no matters identified within the audit report that would require the Office to issue a management decision letter. D. As part of the Office?s federal reporting requirements, the Office obtains information directly from the subrecipient that is used to compile federal reports. The Department does not perform any documented monitoring procedures over the data submitted by the subrecipient to ensure that the following data used is by the Office within the report is complete and accurate: a. the number of unique homeowners that received assistance and subset that are classified as socially disadvantaged and 100 percent are median income or less b. the number homeowners and the amount of funding homeowners received, disaggregated by program design element are complete and accurate. Cause The cause of the condition found is due to insufficient procedures for ensuring monitoring activities performed are documented. Per inquiry of management, we noted that the Office meets weekly with the subrecipient and as part of these meetings, the bi-weekly reports, the QC reports and the data collected that is used as the basis for federal reporting are discussed. However, there is no evidence such as meeting minutes or agendas maintained to validate that this review occurred at an appropriate precision level. In addition, the review of the subrecipient?s uniform guidance report is documented along with its risk assessment process, which may not correspond with the actual receipt and review of the uniform guidance report. Effect The effect of the condition found is that the Office did not comply with 2 CFR section 200.332(d) through (f) and may not issue a management decision timely as required in accordance with 2 CFR section 200.521. Questioned Costs None. Recommendation We recommend that the Office formalize policies and procedures and implement the necessary internal controls to ensure that the Office complies with the provisions of CFR section 200.332(d) through (f) and 2 CFR section 200.251. This would include ensuring that: 1. During the award monitoring procedures are documented and any items requiring follow up or a corrective action are resolved timely and 2. Ensure that all uniform guidance reports are collected and reviewed timely so that a management decision letter can be issued within the time period required by federal regulations. 3. Data collected from the subrecipient used to compile federal reports is monitored to ensure that the data is complete and accurate. View of Responsible Officials The State concurs in part with the findings and recommended action. The State?s HAF program fully launched in March 2022 of the Fiscal Year under review, which ended June 30, 2022. On the whole, a more robust subrecipient monitoring framework and process is being implemented during the current Fiscal Year for this program. However, the State has engaged in thorough monitoring of its subrecipient, receiving and reviewing recurring biweekly and quarterly reports. As noted, discussion of those reports takes place during weekly conversations with the subrecipient. However, the State has acknowledged that it needs to more formally memorialize the substance of such conversations to demonstrate such review. This change in protocol and procedure has already been implemented during this Fiscal Year. The State has also engaged in a subrecipient risk assessment and review of audited financials for the purposes of uniform guidance report review. However, its process and protocols will be revised to better demonstrate when such reviews/assessments take place moving forward. Moreover, the State relies on its subrecipient to facilitate the State?s HAF program, which includes collecting and processing data, as outlined in the program?s policy guide manual. A key feature of that process is a detailed quality control protocol. Additionally, during this Fiscal Year, the State engaged in a robust, on-site review of the subrecipient?s quality control protocols and methods, including applicant file review, and found them satisfactory and reliable. The State also works closely with its subrecipient during the quarterly and annual U.S. Treasury reporting processes, which involves reviewing and analyzing data provided by the subrecipient for reporting purposes. This review and the resulting communications can result in corrections to data prior to submission to U.S. Treasury. Corrective Action and Anticipated Completion Date: As of this response, the State has already implemented several corrective actions that align with the recommendations above, including documentation of report review during weekly calls with the subrecipient, timestamping procedures for uniform guidance report review, and on site, detailed review of quality control protocols that involved applicant file review. The State will further ensure that such updated protocols and procedures are memorialized in the Programs? transaction processing memo during its Q1 2023 update, including any protocols necessary to ensure timely issuance of any required management decisions relative to the subrecipient. Contact Person: Chase Hagaman, Lisa Cota-Robles, and Michele Zangri-Crean
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-008 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Federal Award Numbers: SLFRP0145 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Coronavirus State and Local Fiscal Recovery Funds program, the State of New Hampshire (the State) entered into grant agreements with local entities to support allowable activities under the federal program. During the year ended June 30, 2022, the State passed through $2,108,597 to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following breakdown of internal controls: A. The State communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for 5 of the 10 subrecipients selected for testwork, the State did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) was not communicated for 5 of 10 subrecipients selected for testwork. b. Identification of whether the award is R&D was not communicated for 3 of 10 subrecipients selected for testwork. A. For 2 of 10 subrecipients selected for testwork, there was no documented risk assessment performed over the subrecipient. The State indicated that they had previous experience with these 2 subrecipients and based upon the previous relationship a formal risk assessment was not necessary. As part of our audit, we inquired as to whether a risk assessment was performed in connection with other federal awards that were granted to these entities, but a risk assessment was not able to be provided. While a risk assessment was not performed, we noted that for all each of these 2 subrecipients that the State performed during the award monitoring procedures. B. The State did not appear to have policies and procedures in place to determine if a subrecipient had a Uniform Guidance report if the amount awarded to the subrecipient under this program was under the audit threshold of $750,000. Based on our independent review of uniform guidance submissions within the Federal Audit Clearinghouse, none of the 10 subrecipients selected for testwork had a submitted uniform guidance report, and as such, a management decision letter would not have been required to be submitted for the each of the 10 subrecipients. Cause The cause of the condition found is primarily due to insufficient internal controls and procedures to ensure that award identification information is properly communicated, that risk assessments are performed to ensure sufficient during the awarded monitoring is performed and that all subrecipients are reviewed to determine if a uniform guidance audit was issued regardless of amount awarded to the subrecipient. Given the nature of this program, several Departments within the State entered into subrecipient grants resulting in a decentralized process. Not all Departments within the State are experienced with subrecipient relationships and may not have had developed policies to comply with subrecipient monitoring requirements. Effect The effect of the condition found is that the State did not have sufficient internal controls in place in accordance with 2 CFR section 200.303(a)) and 200.332.(a). In addition, subrecipients could have had a uniform guidance report issued in which a management decision letter needed to be issued but as the Department does not evaluate this for subrecipient?s that were not granted more than $750,000, they would not be able to recognize the need for a management decision letter timely. Questioned Costs None. Recommendation We recommend that the State review its existing internal controls, policies, and procedures to ensure that the State complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b), and 2 CFR section 200.251. This would include ensuring that: 1. All required award information is communicated to subrecipients; 2. Documented risk assessments are performed over all subrecipients; and 3. All subrecipients are reviewed regardless of amount awarded to determine if a uniform guidance report was issued and if a management decision letter should be issued. View of Responsible Officials The State largely concurs with the findings and recommendations and has either implemented procedures to address the identified conditions already or will do so. With regard to condition A(a) and (b), although the State illustrated that it includes clauses related to allowed costs in its subawards, including direct and indirect costs, it will work to ensure that agencies entering into such agreements clearly indicate the terms required by Uniform Guidance, including permitted indirect cost rates and whether the award is for R&D. With regard to condition B, the State agrees that risk assessments should have been completed and has since implemented a framework to help ensure that agencies are more consistently conducting and documenting subrecipient risk assessments. With regard to condition C, the State concurs and has already implemented an agency-wide framework to help ensure procedures and policies are in place concerning Uniform Guidance Report review and the issuance of any necessary management decision letters, to the extent required. It is worth noting that the State in most cases has timely conducted risk assessments of subrecipients and reviewed relevant Uniform Guidance Reports, but its corrective actions will result in better documentation and more consistent and timelier follow through. Anticipated Completion Date: The corrective actions indicated above relative to conditions B and C have already been implemented as of the date of this response. The State will work to address Condition A before the end of the current Fiscal Year. Contact Person: Chase Hagaman and Steve Giovinelli
Finding Reference Number: 2022-009 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Federal Award Numbers: SLFRP0145 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Suspension and Debarment Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300. Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over suspension and debarment, we noted the following as of the year ending June 30, 2022: A. For 9 of 48 items selected for testwork we associated with statewide consulting contracts. Based on discussions with the New Hampshire Department of Administrative Services, they were unaware of any disbarment provisions for Professional Engineers, Registered Architects, or their consulting firms. As a result, we found no evidence that a suspension and debarment certification had been obtained from the contractor or that an independent search of SAM.gov was performed. B. For 10 of 48 items selected for testwork, the State entered into a grant agreement with municipalities that provided funds for the purchase of equipment. The State indicated that these agreements represented direct beneficiary awards as part of the Locality Equipment Purchase Program and as the municipality was a direct beneficiary, suspension and debarment checks were not required. In reviewing 31 CFR section 19.300 we were unable to validate that these subrecipients were exempt from suspension and debarment requirements. C. For 2 of 48 items selected for testwork, the contract did not include a suspension and debarment certification and the entity was not included in SAM.gov. As a result, it is unclear if these entities were suspended or debarred from receiving federal funds. Cause The cause of the condition found is primarily due to insufficient internal controls and procedures to ensure that for all covered transactions the State determines if the entity covered has been suspended or debarred. Effect The effect of the condition found is that the funds could be paid to an entity that has been suspended or debarred and costs paid to the entity would be unallowable. Questioned Costs Not determinable. Recommendation We recommend that the State review its existing policies and procedures related to suspension and debarment and ensure that all covered transactions with entities are properly reviewed to ensure that the entity has not been suspended and debarred. View of Responsible Officials The State concurs. The State will review and strengthen existing policies and procedures related to suspension and debarment to improve compliance. Anticipated Completion Date: December 2023 Contact Person: Chase Hagaman and Steven Giovinelli
Finding Reference Number: 2022-010 NH Department of Business and Economic Affairs COVID-19 State Small Business Credit Initiative Technical Assistance Grant Program (Assistance Listing #21.031) Federal Award Numbers: NOI-0000178 Federal Award Year: 2022 U.S. Department of Treasury Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include those procurement contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: EPLS is no longer a separate system; however, the OMB guidance and agency implementing regulations still refer to it as EPLS), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Additionally, 2 CFR section 200.303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During the year ended June 30, 2022, we noted that the New Hampshire Department of Business and Economic Affairs (the Department) passed through funds to a subrecipient in the amount of $19,661,597. As part of our testwork over suspension and debarment, we noted the Department was unable to provide documentation to support it had verified whether the single subrecipient it had entered into a grant agreement with was suspended or debarred. Based on our review of the System for Award Management (SAM) Exclusion?s website, the subrecipient was not included within the exclusion list indicating that they had been suspended or debarred. Cause The cause of the condition found was the result of the Department being unaware that the agreement they entered into was a subrecipient relationship and that they were required to document that they verified the subrecipient was not suspended or debarred. Effect The effect of the condition found is that the Department could have entered into an agreement with a subrecipient that had been suspended or debarred from receiving federal funds and would not have the necessary internal controls and procedures to identify the suspended or debarred vendor timely. Additionally, the Department was not in compliance with 2 CFR section 180.300. Questioned Costs None. Recommendation We recommend that the Department review its existing policies, procedures, and related internal controls to ensure signed suspension and debarment certifications are in place or the excluded parties listing is reviewed prior to entering a covered transaction with vendors. The Department should also consider whether procedures should be implemented to independently review the System for Award Management Exclusions website to verify if a vendor has been suspended or debarred. View of Responsible Officials The Department acknowledges the misinterpretation of the agreement as a subaward has led to a failure to comply with 2 CFR section 180. Underlying this misinterpretation was the Department?s failure to differentiate between entering into agreements with other state agencies and entities recognized as component units of state government such as the NH Business Finance Authority; noting suspension and debarment policies and procedures do not apply to agreements between state agencies. Accordingly, the Department will review existing policies and procedures related to suspension and debarment certifications to ensure agreements with component units of state government are properly considered. Anticipated Completion Date: June 30, 2023 Contact Person: Taylor Caswell
Finding Reference Number: 2022-011 NH Department of Business and Economic Affairs COVID-19 State Small Business Credit Initiative Technical Assistance Grant Program (Assistance Listing #21.031) Federal Award Numbers: NOI-0000178 Federal Award Year:2022 U.S. Department of Treasury U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the State Small Business Credit Initiative Technical Assistance Grant Program (SSBCI), the New Hampshire Department of Business and Economic Affairs (the Department) entered into a Memorandum of Understanding with a subrecipient that met the requirements of a first tier subaward under the Transparency Act and as such a FFATA report was required to be filed. During the period ending June 30, 2022, the Department did not file the required FFATA report. Cause The cause of the condition found was the result of the Department being unaware that the agreement they entered was a subrecipient relationship and that they were required to submit a FFATA report. Effect The effect of the condition found is that the Department did not comply with the reporting provisions of the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures to ensure that all required FFATA reports are filed and filed timely for all subrecipient grant agreements that meet the definition of a first tier subaward. View of Responsible Officials The Department acknowledges the misinterpretation of the agreement as a subaward has led to a failure to comply with 2 CFR 170. Underlying this misinterpretation was the Department?s failure to differentiate between entering into agreements with other state agencies and entities recognized as component units of state government such as the NH Business Finance Authority; noting FFATA reporting would not apply to agreements between state agencies. Accordingly, the Department will review existing policies and procedures related to FFATA reporting to ensure agreements with component units of state government are properly considered and reported. Anticipated Completion Date: June 30, 2023 Contact Person: Taylor Caswell
Finding Reference Number: 2022-012 NH Department of Business and Economic Affairs COVID-19 State Small Business Credit Initiative Technical Assistance Grant Program (Assistance Listing #21.031) Federal Award Numbers: NOI-0000178 Federal Award Year: 2022 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria In accordance with 2 CFR section 200.1, a subrecipient is an entity, usually but not limited to non-federal entities, that receives a subaward from a pass-through entity to carry out part of a federal award; but does not include an individual that is a beneficiary of such award. A pass-through entity must clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a). The following items are required to be communicated: a. Subrecipient name (which must match the name associated with its unique entity identifier); b. Subrecipient's unique entity identifier; c. Federal Award Identification Number (FAIN); d. Federal Award Date (see ? 200.39 Federal award date) of award to the recipient by the Federal agency; e. Subaward Period of Performance Start and End Date; f. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; g. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current obligation; h. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; i. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); j. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; k. CFDA Number and Name; the pass-through entity must identify the dollar amount made available under each Federal award and the CFDA number at time of disbursement; l. Identification of whether the award is R&D; and m. Indirect cost rate for the Federal award (including if the de minimis rate is charged per ? 200.414 Indirect (F&A) costs). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the State Small Business Credit Initiative Technical Assistance Grant Program (SSBCI), the New Hampshire Department of Business and Economic Affairs (the Department) entered into a Memorandum of Understanding (MOU) with a subrecipient that passed through all programmatic and financial responsibilities of the federal award to the subrecipient. The total amount of funds passed through during the period ending June 30, 2022 was $19,661,597. During our review of the MOU, the Department did not communicate any of the required award information outlined within 2 CFR 200.332(a). Cause The cause of the condition found was the result of the Department being unaware that the agreement they entered was a subrecipient relationship and that they were required to communicate the required award information contained within 2 CFR 200.332(a). Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that the Department complies with the provisions of 2 CFR section 200.332(a) by ensuring that all required award information is communicated to subrecipients. View of Responsible Officials The Department acknowledges the misinterpretation of the agreement as a subaward has led to a failure to comply with 2 CFR section 200.332(a). Underlying this misinterpretation was the Department?s failure to differentiate between entering into agreements with other state agencies and entities recognized as component units of state government such as the NH Business Finance Authority; noting agreements between state agencies would not require such compliance. Accordingly, the Department will review existing policies and procedures related to subawarding and subrecipient monitoring to ensure agreements with component units of state government are properly considered. Additionally, the Department will amend the existing agreement to ensure required award information is communicated and ensure all other subrecipient monitoring protocols are applied to the subaward. Anticipated Completion Date: June 30, 2023 Contact Person: Taylor Caswell
Finding Reference Number: 2022-013 NH Department of Education Title I Grants to Local Educational Agencies (Title I, Part A of ESEA (Assistance Listing #84.010)) Federal Award Numbers: S010A200029, S010A210029 Federal Award Year: 2021, 2022 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-013 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $42,672,742 in Title I Grants to Local Educational Agencies funds to subrecipients (LEAs). During our testwork over FFATA reporting at the Department for Title I Grants, we selected 60 FFATA reports for testing and noted none were reported. Specifically, we noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement policies and procedures which include internal controls across the Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-014 NH Department of Education Special Education Cluster (Assistance Listing #84.027 and #84.173) Federal Award Numbers: H027A210103, H173A210109, H027A180103, H173A180109 Federal Award Year: 2021, 2022 U.S. Department of Education Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, the New Hampshire Department of Education (the Department) passed through $50,310,796 of federal funding to 174 subrecipients. As part of our testing related subrecipient monitoring, we noted that the Department communicates to subrecipients through the Grant Award Notifications (GANs). Per review of the GAN, we noted the following: A. For 44 of 44 subrecipients selected for testwork, the Department did not communicate the federal award identification number. B. For 15 of 44 subrecipients selected for testwork, the Department did not communicate the full award amount. Instead, the Department only communicated the subrecipients first installment amount entered into Grant Management System (GMS) which is a portion of the subrecipient?s total federal funding allocation. Cause The cause of the condition found was primarily due to breakdown of internal controls to ensure that the Grant Award Notification sent to subrecipients includes all required award data elements, including federal award identification number and full award amount. Effect The effect of the condition found is that the Department may not be in compliance with 2 CFR section 200.332(a)(1). Questioned Costs Not determinable. Recommendation We recommend that the Department review its existing policies and procedures over subrecipient monitoring award identification requirements and revise procedures and internal controls to ensure that information described in 2 CFR section 200.332(a)(1) is clearly identified to the subrecipient at the time of subaward (or subsequent subaward modification). View of Responsible Officials NHED concurs with the finding identified in section A. This was an oversight on the part of NHED, and a process has been implemented to ensure that when the GAN template is generated, there is a review by 2 separate staff members to ensure all required elements on the GAN are complete. NHED concurs with the finding identified in Section B. The previous Division Director of Learner Support, without understanding the unintended consequences, required that the IDEA allocations be uploaded in separate installments instead of including the full year award amount. This led to a GAN generation that included only the first installment. This procedure has since been corrected and NHED is now uploading the full year allocation amount in GMS, this will then generate a GAN that reflects the full year grant amount. If a reallocation does occur, there is a review by 2 separate staff members to ensure that the amount is verified and that a new GAN is manually generated to include that verified amount, and then the GAN is reissued to the recipient. Anticipated Completion Date: Already completed Contact Person: Lindsey Labonville
Finding Reference Number: 2022-015 NH Department of Education Special Education Cluster (Assistance Listing #84.027 and #84.173) Federal Award Numbers: H027A180103, H027A190103, H027A210103 Federal Award Year: 2018, 2019, 2021 U.S. Department of Education Compliance Requirement: Period of Performance Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria LEAs and SEAs must obligate funds during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15-month period of initial availability plus a 12-month period for carryover. For example, funds from the fiscal year 2019 appropriation initially became available on July 1, 2019; and may be obligated by the grantee and subgrantee through September 30, 2021 (Section 421(b) of GEPA (20 USC 1225(b)); 34 CFR sections 76.703 through 76.710). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over period of performance at the New Hampshire Department of Education (the Department), we noted for 12 of 12 expenditures selected for testing awards that started during the state fiscal year, the Department had charged the expense to the new federal fiscal year grant, however, the date of service on the invoice was for a period prior to the start of that federal award. Furthermore, during our testwork over period of performance at the New Hampshire Department of Education (the Department), we noted for 12 of 40 expenditures selected for testing awards that ended/liquidated during the state fiscal year, the Department had charged the expense to the old federal fiscal year grant, however, the date of service on the invoice was for a period subsequent to the end of that federal award. Lastly, the Department had a breakdown of internal controls to ensure that expenditures are charged to the correct CAN for period of performance tracking. Cause The cause of the condition found is due to how the Department charges costs to federal grants and the breakdown of internal controls to ensure that expenditures are charged to the correct CAN for period of performance tracking. Effect The effect of the condition found is that the Department did not comply with the period of performance regulations. Questioned Costs $117,634 - the amount of expenditures charged to the Fiscal Year 2019 award that related to a date of service subsequent to the end of liquidation period for that award $5,811 - the amount of expenditures charged to the Fiscal Year 2021 award that related to a date of service prior to the start of that federal award $593 - the amount of expenditures charged to the Fiscal Year 2018 award that related to a date of service subsequent to the end of liquidation period for that award Recommendation We recommend that the Department implement internal control and policies and procedures to ensure costs are appropriately charged to federal awards based on the incurred date. View of Responsible Officials The Department does not concur. The Department notes extensions are in place related to COVID-19 and the Tydings Amendment through the Department of Education mitigating the condition noted. The Department will confer with the US DE to clarify the extensions in place and resolve any disparities identified within the finding. Anticipated Completion Date: Completed as of the date of this report Contact Person: Lindsey Labonville, Melissa White Rejoinder Based on the supporting documentation provided by the Department, it did not appear that the expenses identified within the condition found were charged to the correct period of performance during the liquidation period. Subsequently management adjusted the CAN the expenses related to which would correct the condition found.
Finding Reference Number: 2022-014 NH Department of Education Special Education Cluster (Assistance Listing #84.027 and #84.173) Federal Award Numbers: H027A210103, H173A210109, H027A180103, H173A180109 Federal Award Year: 2021, 2022 U.S. Department of Education Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, the New Hampshire Department of Education (the Department) passed through $50,310,796 of federal funding to 174 subrecipients. As part of our testing related subrecipient monitoring, we noted that the Department communicates to subrecipients through the Grant Award Notifications (GANs). Per review of the GAN, we noted the following: A. For 44 of 44 subrecipients selected for testwork, the Department did not communicate the federal award identification number. B. For 15 of 44 subrecipients selected for testwork, the Department did not communicate the full award amount. Instead, the Department only communicated the subrecipients first installment amount entered into Grant Management System (GMS) which is a portion of the subrecipient?s total federal funding allocation. Cause The cause of the condition found was primarily due to breakdown of internal controls to ensure that the Grant Award Notification sent to subrecipients includes all required award data elements, including federal award identification number and full award amount. Effect The effect of the condition found is that the Department may not be in compliance with 2 CFR section 200.332(a)(1). Questioned Costs Not determinable. Recommendation We recommend that the Department review its existing policies and procedures over subrecipient monitoring award identification requirements and revise procedures and internal controls to ensure that information described in 2 CFR section 200.332(a)(1) is clearly identified to the subrecipient at the time of subaward (or subsequent subaward modification). View of Responsible Officials NHED concurs with the finding identified in section A. This was an oversight on the part of NHED, and a process has been implemented to ensure that when the GAN template is generated, there is a review by 2 separate staff members to ensure all required elements on the GAN are complete. NHED concurs with the finding identified in Section B. The previous Division Director of Learner Support, without understanding the unintended consequences, required that the IDEA allocations be uploaded in separate installments instead of including the full year award amount. This led to a GAN generation that included only the first installment. This procedure has since been corrected and NHED is now uploading the full year allocation amount in GMS, this will then generate a GAN that reflects the full year grant amount. If a reallocation does occur, there is a review by 2 separate staff members to ensure that the amount is verified and that a new GAN is manually generated to include that verified amount, and then the GAN is reissued to the recipient. Anticipated Completion Date: Already completed Contact Person: Lindsey Labonville
Finding Reference Number: 2022-015 NH Department of Education Special Education Cluster (Assistance Listing #84.027 and #84.173) Federal Award Numbers: H027A180103, H027A190103, H027A210103 Federal Award Year: 2018, 2019, 2021 U.S. Department of Education Compliance Requirement: Period of Performance Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria LEAs and SEAs must obligate funds during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15-month period of initial availability plus a 12-month period for carryover. For example, funds from the fiscal year 2019 appropriation initially became available on July 1, 2019; and may be obligated by the grantee and subgrantee through September 30, 2021 (Section 421(b) of GEPA (20 USC 1225(b)); 34 CFR sections 76.703 through 76.710). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over period of performance at the New Hampshire Department of Education (the Department), we noted for 12 of 12 expenditures selected for testing awards that started during the state fiscal year, the Department had charged the expense to the new federal fiscal year grant, however, the date of service on the invoice was for a period prior to the start of that federal award. Furthermore, during our testwork over period of performance at the New Hampshire Department of Education (the Department), we noted for 12 of 40 expenditures selected for testing awards that ended/liquidated during the state fiscal year, the Department had charged the expense to the old federal fiscal year grant, however, the date of service on the invoice was for a period subsequent to the end of that federal award. Lastly, the Department had a breakdown of internal controls to ensure that expenditures are charged to the correct CAN for period of performance tracking. Cause The cause of the condition found is due to how the Department charges costs to federal grants and the breakdown of internal controls to ensure that expenditures are charged to the correct CAN for period of performance tracking. Effect The effect of the condition found is that the Department did not comply with the period of performance regulations. Questioned Costs $117,634 - the amount of expenditures charged to the Fiscal Year 2019 award that related to a date of service subsequent to the end of liquidation period for that award $5,811 - the amount of expenditures charged to the Fiscal Year 2021 award that related to a date of service prior to the start of that federal award $593 - the amount of expenditures charged to the Fiscal Year 2018 award that related to a date of service subsequent to the end of liquidation period for that award Recommendation We recommend that the Department implement internal control and policies and procedures to ensure costs are appropriately charged to federal awards based on the incurred date. View of Responsible Officials The Department does not concur. The Department notes extensions are in place related to COVID-19 and the Tydings Amendment through the Department of Education mitigating the condition noted. The Department will confer with the US DE to clarify the extensions in place and resolve any disparities identified within the finding. Anticipated Completion Date: Completed as of the date of this report Contact Person: Lindsey Labonville, Melissa White Rejoinder Based on the supporting documentation provided by the Department, it did not appear that the expenses identified within the condition found were charged to the correct period of performance during the liquidation period. Subsequently management adjusted the CAN the expenses related to which would correct the condition found.
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-017 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-019 Statistically Valid Sample: No Criteria Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include those procurement contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: EPLS is no longer a separate system; however, the OMB guidance and agency implementing regulations still refer to it as EPLS), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our compliance testwork related to procurement and suspension and debarment, we noted for 5 of 31 agreements selected for testwork, we noted that the New Hampshire Department of Health and Human Services (the Department) was unable to provide documentation to support it had verified whether the contractor or subrecipient was suspended or debarred. For our control testwork we noted 1 of 5 agreements selected for testwork, the Department was unable to provide documentation to support it had verified whether the vendor was suspended or debarred before entering into the contract or grant agreement. Based on our review of the System for Award Management (SAM) Exclusion?s website, none of the vendors selected for testwork were included within the exclusion list indicating that they had been suspended or debarred. Cause The cause of the condition found was the result of insufficient internal controls in place to ensure that Department suspension debarment policies are followed, and adequate documentation is maintained to support the Departments verification. Effect The effect of the condition found is that the Department could have entered into an agreement with a vendor that had been suspended or debarred from receiving federal funds and would not have the necessary internal controls and procedures to identify the suspended or debarred vendor timely. Additionally, the Department was not in compliance with 2 CFR section 180.300. Questioned Costs Not determinable. Recommendation We recommend that the Department continue to review its existing policies, procedures, and related internal controls to ensure signed suspension and debarment certifications are in place or the excluded parties listing is reviewed prior to entering into a covered transaction with vendors. The Department should also consider whether or not procedures should be implemented to independently review the System for Award Management Exclusions website to verify if a vendor has been suspended or debarred. View of Responsible Officials The Department will review existing internal controls to assess whether they are sufficient to provide management with reasonable assurance the Department complies with the 2 CFR section 180.300. It is important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required attestation for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. All standard templates require vendors to sign a certification regarding suspension and debarment. Anticipated Completion Date: July 2023 Contact Person: Melissa Kelleher, Grants Administrator
Finding Reference Number: 2022-018 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-021 Statistically Valid Sample: No Criteria A pass-through entity (PTE) must: 1. Identify the Award and Applicable Requirements ? Clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.332(a)(1); (2) all requirements imposed by the PTE on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.332(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.332(a)(3)). 2. Evaluate Risk ? Evaluate each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). 3. Monitor ? Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: a. Reviewing financial and programmatic (performance and special reports) required by the PTE. b. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. c. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. 4. Ensure Accountability of For-Profit Subrecipients ? Some federal awards may be passed through to for-profit entities. For-profit subrecipients are accountable to the PTE for the use of the federal funds provided. Because 2 CFR Part 200 does not make Subpart F applicable to for-profit subrecipients, the PTE is responsible for establishing requirements, as necessary, to ensure compliance by for-profit subrecipients for the subaward. The agreement with the for-profit subrecipient must describe applicable compliance requirements and the for-profit subrecipient's compliance responsibility. Methods to ensure compliance for federal awards made to for-profit subrecipients may include pre-award audits, monitoring during the agreement, and post-award audits (2 CFR section 200.501(h)). Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award Condition During the year ended June 30, 2022, the New Hampshire Department of Health and Human Services (the Department) passed through $5,070,789 of federal funding to 56 subrecipients, both for-profit and non-profit. As part of our testing related subrecipient monitoring, we noted the following: A. The Department communicates award information to subrecipients through the approved agreement. Per review of the agreement, for 14 of 14 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332(a). Specifically, one or all of the following elements were not communicated: - Subrecipient unique entity identifier; - Federal award date; - Name of the federal awarding agency, pass-through entity, and contact information for the awarding official of the pass-through entity; - Identification of whether the award is R&D; and - Indirect cost rate for the federal award B. The Department was unable to provide documentation to support it had evaluated subrecipient risk of noncompliance for all subrecipients for purposes of determining the appropriate subrecipient monitoring related to subawards. C. The Department did not perform any during the award monitoring over the programs subrecipients. D. The Department passed through federal funding to for-profit subrecipients. These subrecipients are not subject to 2 CFR 200 Subpart F and as such, no review over the uniform guidance audit report is performed by the Department. The Department was unable to provide documentation to support it had performed procedures to ensure compliance with the subrecipient agreement in accordance with 2 CFR section 200.501(h). Cause The cause of the condition found was primarily due to a lack of formal policies and internal controls to ensure that all required subrecipient monitoring compliance procedures are being performed by the Department. Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a - h) and 2 CFR section 200.501(h). Questioned Costs None. Recommendation We recommend the Department develop policies and procedures and implement internal controls to ensure that the Department complies with 2 CFR section 200.332(a-h) and 2 CFR section 200.501(h). View of Responsible Officials The Department will review its Sub-recipient Monitoring Policy and assess compliance across the Department. It is important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required notifications for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. The Financial Compliance Unit (FCU) will continue to work with the Business System Analyst of the Cost Allocation Unit in determining the amount of Federal payments made to the vendors. The FCU receives a vendor payment list on a quarterly basis that includes the total amount of Federal funds that were paid to all contracted agencies. We will continue to closely monitor the FAC to obtain all copies of the Single Audits pertaining to the DHHS agencies. In addition, we will devise a spreadsheet that will list all contracts that have been awarded Federal funds and cross check these agencies to vendor payment list. The DHHS updated the policy on risk assessment on November 16, 2020 to ensure that all contracts have a risk assessment performed regardless of funding source. We also have added verbiage in the contracts effective for contracts that begin after November 2021. It states any Contractor that receives an amount equal to or greater than $250,000 from the Department during a single fiscal year, regardless of the funding source, may be required, at a minimum, to submit annual financial audits performed by an independent CPA if the Department?s risk assessment determination indicates the Contractor is high-risk. Finally, effective for any new procurement subsequent to March 2022, all back-up documentation must accompany the invoices and be submitted on a monthly basis. Anticipated Completion Date: July 2023 Contact Person: Melissa Kelleher, Grants Administrator, Ann Driscoll, Financial Compliance Unit
Finding Reference Number: 2022-019 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program, the New Hampshire Department of Health and Human Services (the Department) reports financial information to the CDC on a monthly basis including expenditures paid out and the amount of unliquidated obligations for the reporting period. For 11 of 31 monthly reports selected for testwork, there was no documentation maintained to evidence Department review of the monthly reports prior to submission to CDC. Cause The cause of the condition found was the result of insufficient internal controls in place to ensure that Department monthly reporting policies are followed, and documentation of review is maintained. Effect The effect of the condition found is that the Department did not comply with the provisions of the Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that all required monthly financial reports are reviewed prior to being filed timely and documentation of review is maintained. View of Responsible Officials We concur. The Department has been reviewing and second reviewing all required monthly financial reports and maintaining documentation since January 2022. We believe this current control in place allows us to remain in compliance with all requirements. Anticipated Completion Date: March 2, 2023 Contact Person: Shelley Swanson, DPHS Finance Director
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-017 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-019 Statistically Valid Sample: No Criteria Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include those procurement contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: EPLS is no longer a separate system; however, the OMB guidance and agency implementing regulations still refer to it as EPLS), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our compliance testwork related to procurement and suspension and debarment, we noted for 5 of 31 agreements selected for testwork, we noted that the New Hampshire Department of Health and Human Services (the Department) was unable to provide documentation to support it had verified whether the contractor or subrecipient was suspended or debarred. For our control testwork we noted 1 of 5 agreements selected for testwork, the Department was unable to provide documentation to support it had verified whether the vendor was suspended or debarred before entering into the contract or grant agreement. Based on our review of the System for Award Management (SAM) Exclusion?s website, none of the vendors selected for testwork were included within the exclusion list indicating that they had been suspended or debarred. Cause The cause of the condition found was the result of insufficient internal controls in place to ensure that Department suspension debarment policies are followed, and adequate documentation is maintained to support the Departments verification. Effect The effect of the condition found is that the Department could have entered into an agreement with a vendor that had been suspended or debarred from receiving federal funds and would not have the necessary internal controls and procedures to identify the suspended or debarred vendor timely. Additionally, the Department was not in compliance with 2 CFR section 180.300. Questioned Costs Not determinable. Recommendation We recommend that the Department continue to review its existing policies, procedures, and related internal controls to ensure signed suspension and debarment certifications are in place or the excluded parties listing is reviewed prior to entering into a covered transaction with vendors. The Department should also consider whether or not procedures should be implemented to independently review the System for Award Management Exclusions website to verify if a vendor has been suspended or debarred. View of Responsible Officials The Department will review existing internal controls to assess whether they are sufficient to provide management with reasonable assurance the Department complies with the 2 CFR section 180.300. It is important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required attestation for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. All standard templates require vendors to sign a certification regarding suspension and debarment. Anticipated Completion Date: July 2023 Contact Person: Melissa Kelleher, Grants Administrator
Finding Reference Number: 2022-018 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-021 Statistically Valid Sample: No Criteria A pass-through entity (PTE) must: 1. Identify the Award and Applicable Requirements ? Clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.332(a)(1); (2) all requirements imposed by the PTE on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.332(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.332(a)(3)). 2. Evaluate Risk ? Evaluate each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). 3. Monitor ? Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: a. Reviewing financial and programmatic (performance and special reports) required by the PTE. b. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. c. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. 4. Ensure Accountability of For-Profit Subrecipients ? Some federal awards may be passed through to for-profit entities. For-profit subrecipients are accountable to the PTE for the use of the federal funds provided. Because 2 CFR Part 200 does not make Subpart F applicable to for-profit subrecipients, the PTE is responsible for establishing requirements, as necessary, to ensure compliance by for-profit subrecipients for the subaward. The agreement with the for-profit subrecipient must describe applicable compliance requirements and the for-profit subrecipient's compliance responsibility. Methods to ensure compliance for federal awards made to for-profit subrecipients may include pre-award audits, monitoring during the agreement, and post-award audits (2 CFR section 200.501(h)). Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award Condition During the year ended June 30, 2022, the New Hampshire Department of Health and Human Services (the Department) passed through $5,070,789 of federal funding to 56 subrecipients, both for-profit and non-profit. As part of our testing related subrecipient monitoring, we noted the following: A. The Department communicates award information to subrecipients through the approved agreement. Per review of the agreement, for 14 of 14 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332(a). Specifically, one or all of the following elements were not communicated: - Subrecipient unique entity identifier; - Federal award date; - Name of the federal awarding agency, pass-through entity, and contact information for the awarding official of the pass-through entity; - Identification of whether the award is R&D; and - Indirect cost rate for the federal award B. The Department was unable to provide documentation to support it had evaluated subrecipient risk of noncompliance for all subrecipients for purposes of determining the appropriate subrecipient monitoring related to subawards. C. The Department did not perform any during the award monitoring over the programs subrecipients. D. The Department passed through federal funding to for-profit subrecipients. These subrecipients are not subject to 2 CFR 200 Subpart F and as such, no review over the uniform guidance audit report is performed by the Department. The Department was unable to provide documentation to support it had performed procedures to ensure compliance with the subrecipient agreement in accordance with 2 CFR section 200.501(h). Cause The cause of the condition found was primarily due to a lack of formal policies and internal controls to ensure that all required subrecipient monitoring compliance procedures are being performed by the Department. Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a - h) and 2 CFR section 200.501(h). Questioned Costs None. Recommendation We recommend the Department develop policies and procedures and implement internal controls to ensure that the Department complies with 2 CFR section 200.332(a-h) and 2 CFR section 200.501(h). View of Responsible Officials The Department will review its Sub-recipient Monitoring Policy and assess compliance across the Department. It is important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required notifications for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. The Financial Compliance Unit (FCU) will continue to work with the Business System Analyst of the Cost Allocation Unit in determining the amount of Federal payments made to the vendors. The FCU receives a vendor payment list on a quarterly basis that includes the total amount of Federal funds that were paid to all contracted agencies. We will continue to closely monitor the FAC to obtain all copies of the Single Audits pertaining to the DHHS agencies. In addition, we will devise a spreadsheet that will list all contracts that have been awarded Federal funds and cross check these agencies to vendor payment list. The DHHS updated the policy on risk assessment on November 16, 2020 to ensure that all contracts have a risk assessment performed regardless of funding source. We also have added verbiage in the contracts effective for contracts that begin after November 2021. It states any Contractor that receives an amount equal to or greater than $250,000 from the Department during a single fiscal year, regardless of the funding source, may be required, at a minimum, to submit annual financial audits performed by an independent CPA if the Department?s risk assessment determination indicates the Contractor is high-risk. Finally, effective for any new procurement subsequent to March 2022, all back-up documentation must accompany the invoices and be submitted on a monthly basis. Anticipated Completion Date: July 2023 Contact Person: Melissa Kelleher, Grants Administrator, Ann Driscoll, Financial Compliance Unit
Finding Reference Number: 2022-019 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program, the New Hampshire Department of Health and Human Services (the Department) reports financial information to the CDC on a monthly basis including expenditures paid out and the amount of unliquidated obligations for the reporting period. For 11 of 31 monthly reports selected for testwork, there was no documentation maintained to evidence Department review of the monthly reports prior to submission to CDC. Cause The cause of the condition found was the result of insufficient internal controls in place to ensure that Department monthly reporting policies are followed, and documentation of review is maintained. Effect The effect of the condition found is that the Department did not comply with the provisions of the Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that all required monthly financial reports are reviewed prior to being filed timely and documentation of review is maintained. View of Responsible Officials We concur. The Department has been reviewing and second reviewing all required monthly financial reports and maintaining documentation since January 2022. We believe this current control in place allows us to remain in compliance with all requirements. Anticipated Completion Date: March 2, 2023 Contact Person: Shelley Swanson, DPHS Finance Director
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-020 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provisions: Child Support Non-Cooperation Type of Finding: Significant Deficiency Prior Year Finding: 2021-023 Statistically Valid Sample: No Criteria If the State agency responsible for administering the State plan under Title IV-D of the Social Security Act determines that an individual is not cooperating with the State in establishing paternity, or in establishing, modifying or enforcing a support order with respect to a child of the individual, and reports that information to the State agency responsible for TANF, the State TANF agency must (1) deduct an amount equal to not less than 25% from the TANF assistance that would otherwise be provided to the family of the individual and (20 may deny the family any TANF assistance. Health and Human Services (HHS) may penalize a State for up to 5% of the SFAG for failure to substantially comply with this required State child support program (45 CFR sections 264.30 and 264.31) Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our testwork over sanctions imposed for child support non-cooperation, we noted the following: A. For 1 of 9 cases selected for testwork, we noted that while the date of non-cooperation was September 14, 2021, the Department did not assess the required sanction for non-cooperation until the October 16, 2021 benefit payment period, resulting in the participant being overpaid approximately $222. B. As part of our testwork over sanctions imposed on single custodial parents of children under the age of 6, we noted that for 1 of 7 cases selected for testwork, the participant was not sanctioned due to inability to obtain childcare, but instead the case was sanctioned due to child support non-cooperation. Per review of the participant case file, the letter of non-cooperation required to establish the sanction was not maintained within the case file. As a result, it was unclear if the participant should have been sanctioned. Cause The cause of the condition found was a result of insufficient internal controls in place to ensure that required forms are obtained and maintained within the participant?s case file and to ensure that sanctions are applied timely and appropriately. Effect The effect of the condition found is that a breakdown in internal controls allowed for participant benefit payments to be inaccurate resulting in unallowable costs charged to the federal program or sanctions could have been imposed that were not appropriate. Questioned Costs $222 ? the overpayment in condition A above. Recommendation We recommend that the Department continue to enhance its existing internal controls and procedures to ensure the documentation used to support the beginning and termination of sanction periods is maintained and timely communicated so that sanctions are applied to participant benefit payments timely and appropriately. View of Responsible Officials Condition A We concur. The department received the notice of non-cooperation on 9/14/21 and did not enter the non-cooperation until 9/29/21, which was beyond the 10-day time frame. The case should have then been confirmed to impose the sanction on or before 9/24/21. This resulted in the client being over issued by approximately $222.37. Condition B We concur. The sanction for non-cooperation with Child Support was entered in error as Child Support did not issue a non-compliance. This resulted in the client being under issued by approximately $446.50 Follow-up We will be informing all supervisors of the specific errors found during the audit. We will also require supervisors to include these topics at their next staff meeting. In addition, individual emails will be sent to the staff involved with the errors and provide guidance. Anticipated Completion Date: N/A Contact Person: Karyl Provost
Finding Reference Number: 2022-021 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: NA Statistically Valid Sample: No Criteria5 A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 4. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Temporary Assistance for Needy Families program (TANF), the New Hampshire Department of Health and Human Services (the Department) enters into grant agreements with local entities to provide services to support eligible participants. During the year ended June 30, 2022, the Department passed through $3,307,974 to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following: A. For 1 of 7 subrecipients selected for testwork, per review of the grant agreement, we noted that the agreement did not contain any funding to be paid under the TANF program and should not have been identified as a TANF subrecipient. The total amount paid to the entity was $13,530. B. The Department communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for 4 of the remaining 6 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. The subrecipient?s unique identifier was not communicated for 1 of the remaining 6 subrecipients selected for testwork b. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) was not communicated for 2 of the remaining 6 subrecipients selected for testwork c. Identification of whether the award is R&D was not communicated for 4 of the remaining 6 subrecipients selected for testwork. C. The Department did not perform a risk assessment for all subrecipients selected for testwork. As a result, it is unclear if any additional targeted subrecipient monitoring should have been performed. D. For 1 of the remaining 6 subrecipients selected for testwork, there was no evidence that a programmatic monitoring review was completed for the subrecipient as required by their subrecipient monitoring policy. As there was no risk assessment performed for the subrecipient, it was unclear as to whether a programmatic monitoring visit should have been performed. Cause The cause of the condition found is primarily due to insufficient internal controls and procedures to ensure that federal reimbursement of expenditures are only disbursed to entities that have an approved subrecipient grant agreement. In addition, there are insufficient internal controls and procedures to ensure that award identification information is properly communicated with grant agreements and that risk assessments are performed to ensure sufficient during the awarded monitoring is performed over all subrecipients. Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a), section 200.332(b), CFR section 200.521 and 2 CFR sections 200.332(d) through (f). Questioned Costs $13,530 ? the amount in bullet A above. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that the Department complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b), 2 CFR sections 200.332(d) through (f), and 2 CFR section 200.251. This would include ensuring that: 1. The Department has an approved subrecipient grant agreement prior to making any disbursements to an entity; 2. All required award information is communicated to subrecipients; 3. A documented risk assessment is performed over all subrecipients, and the results of that risk assessment is used to evaluate the types of monitoring procedures that will be performed over the subrecipient; and 4. As a result of the risk assessment performed, monitoring activities are performed over subrecipients to ensure compliance with the terms and conditions of its subrecipient grant agreement. View of Responsible Officials A. We concur with this finding. The Department utilized an internally available copy of the Management Log, which lists vendor?s determinations. This is a copy of the log, not the original, official copy. There is a delay in updating this copy from the original, and incorrect information had been initially entered. The Department is moving this log to software which allows all Department employees to view the same log, while limiting the number of individuals who have access to make changes. Implementation has been completed as of March 2023. B. We concur with this finding. However, we believe this was an isolated incident as the TANF CFDA number (93.558) used was very similar to correct CFDA number (93.778) that should have been documented. C. 200.332 requirements a. We do not concur with this finding. The contract for Mt Prospect became effective 8/4/21, prior to the 4/22 inception of the UEI. The DUNS number, as in effect at that time, is noticed in Exhibit J of the contract. b. We concur with three of the four findings. Two of the four contracts pre-date the template update requiring the notice an indirect cost rate. Indirect cost rate for federal awards (including if the de minimis rate is charged per 2 CFR section 200.414) were added to Exhibit C of the Department?s contracts in April 2020. One of the contracts did not indicate an indirect cost rate as required. One of the contracts notes the indirect cost rate in the Notes of their financial details. c. One of the two contracts pre-dates the template update requiring the notice the identification of R&D. R&D identifications for federal awards were added to Exhibit C of the Department?s contracts in April 2020 One of the two contracts did not identify whether the contract was R&D as required. D. Subrecipient Risk Assessment ? We concur with the finding. We consider the finding to be fully resolved through Department policy Department policy and Department wide implementation. However, it should be noted full compliance will not be achieved for one to two contact cycles due to timing. The Department began addressing the issue of Subrecipient Monitoring issue in June 2017 when the first Grants Administrator was hired. The Department finalized the Subrecipient Monitoring Policy, which encompasses the financial and programmatic risk assessments as well as the subrecipient monitoring, on June 1, 2018. The Department provided user training on the subject in February and September 2018, training over one hundred forty-six staff. However, only brand new procurements utilized this policy during the initial roll out of this policy. The Department hired a new Grants Administrator in May 2019. The full Subrecipient Monitoring policy rolled out to all procurements, including sole source, amendments, and renewals, effective August 1, 2020. The Contracts Unit received specialized subrecipient monitoring training on May 13 and October 28, 2020. Department wide training to all staff occurred weekly between September 8 and November 3, 2020. The Grants Office provided additional targeted training to Program staff through team meetings. Over one hundred fifty Program and Finance staff received training. Annual training will be held in September each year. Refresher training or training for new staff is available upon request from the Grants Office. The Grants Office website offers Program, Finance, and Contracts Bureau staff access to the subrecipient monitoring policy, as well as training modules, slides, and tools. The training has also been recorded and is available on this site. The Subrecipient Monitoring Policy requires Program to determine whether any vendor which receives funds in exchange for goods or services is a Contractor or Subrecipient. Determined subrecipients receive a Management Questionnaire, which includes a ten question questionnaire and requirements for submitting financial data. This information is used to populate the Risk Assessment Tool, which shows any risks pertinent to a subrecipient and the subaward. Based on the risks shown, Program chooses monitoring activities to mitigate the risks and the Contracts Bureau memorializes these choices in the contract. The Grants Office continues to work closely with the Contracts Bureau to ensure compliance with the Subrecipient Monitoring policy. C. and D. It is also important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates, which did not include the required notifications under 200.332, were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required notifications for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. E. We concur there was no formal documentation of any monitoring activity. Due to staff turnover a new administrator has been hired and unable to furnish the monitoring that took place during FY22. However, a program site review during FY23 was performed and financial monitoring of invoices has also taken place. Anticipated Completion Date: July, 2023 Contact Person: Melissa Kelleher, Administrator Rejoinder As documented above in Bullet B of the condition found, the Department did not properly communicate all required award information to the subrecipient. Once aware of the noncompliance, the Department should have timely communicated this information to its subrecipients.
Finding Reference Number: 2022-022 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Matching, Level of Effort and Earmarking ? Maintenance of Effort Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-024 Statistically Valid Sample: No Criteria Every fiscal year, a State must maintain an amount of ?qualified state expenditures? (as defined in 42 US609(a)(7)(B) and 45 CFR section 263.2) for eligible families (as defined in 42 USC 609(a)(7)(B)(i)(IV) and 45 CFR section 263.2(b)) at least at the applicable percentage of the State?s historic State expenditures. Qualified expenditures with respect to eligible families may come from all programs. This requirement may be met through allowable state or local cash expenditures for goods and services, cash donations by non-governmental third parties, or the value of third-party in-kind contributions. A State?s records must show that all costs are verifiable and meet all applicable requirements in 45 CFR sections 263.2 through 263.6.45. Additionally, 45 CFR 75 section 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition For the federal fiscal year end September 30, 2021, the New Hampshire Department of Health and Human Services (the Department) was required to meet an annual maintenance of effort (MOE) requirement of $32,115,003. The Department MOE expenditures during this period of $38,072,519, which exceeded the MOE required amount by $5,957,519. Of the MOE expenditures incurred, $10,957,419 represented in-kind contributions from 15 community organizations. On an annual basis, each community organization completes a Temporary Assistance for Needy Families (TANF) MOE form to report expenses that qualify as TANF expenditures. The form requires a description of the program operations, what TANF purpose the program addresses, the number of families served, and the amount of eligible expenditures in total. The form is signed by the organization and submitted to the Department to serve as the supporting documentation for the in-kind contribution provided by the community organization. No additional documentation is provided by the community organization to support the amount of the expenditures included on the form. The Department does not perform procedures to ensure expenditures reported by the community organization are accurate and represent valid expenditures that were incurred to support the program outlined within the form and in turn to ensure the in-kind contribution used to support the required MOE is appropriate. Cause The cause of the condition found was a result of insufficient internal controls and procedures to ensure the expenditures reported by the community organizations are properly supported by valid expenditures that meet the criteria of qualified TANF expenditures. As the Department enters into a memorandum of understanding (MOU) with each community organization that outlines the types of costs that are allowable sources of MOE and obtains a signed certification from each organization as to the amount of expenditures incurred, the Department indicated that the support provided is sufficient and therefore does not validate the information for accuracy. Effect The effect of the condition found is that the Department may not meet the required annual MOE requirement as in-kind contributions may not be complete or represent qualified expenditures and does not have internal controls and procedures in place to identify noncompliance timely. Questioned Costs Not determinable. Recommendation We recommend that the Department implement internal controls and procedures to ensure that in-kind contributions used to support MOE are reviewed to ensure that the expenditures are accurate and meet the definition of qualifying expenditures. View of Responsible Officials We do not concur. The expenditures outlined are considered verifiable costs via the Memorandum of Understanding (MOU) and the Maintenance of Effort (MOE) forms completed by the third party agency. As part of the June 30, 2018 audit a similar finding is noted which we also did not concur with as part of that audit. The department has since been in contact and had meetings with the Federal Administration for Children and Families (ACF). In addition, a formal response was provided by ACF on August 31, 2022 that stated they are hoping to resolve this outstanding issue soon. We are currently awaiting the Federal Administration for Children and Families (ACF) decision concerning this finding and as such, we do not believe any corrective action is required. Anticipated Completion Date When the decision from ACF is given we will respond accordingly. Until then no corrective action is considered necessary. Contact Person: Mary Calise, Deputy Chief Financial Officer, Depart. of Health and Human Services Rejoinder The Department stated in their response that it verifies the completeness and accuracy of the third-party in-kind match through the MOU entered into and the MOE forms that the providers submit. Per review of the signed certifications (or the MOE forms), we noted the certification contains a description of the general purpose of the program, an identification of the TANF purpose the program addresses, the number of families/individuals served, the expenses incurred under the program, excluding any federal and state funds received. While we were provided with documentation to support that the third-party certifications were received, we were not provided with evidence to support the Department had performed additional procedures to verify the incurred costs were complete and accurate as required by 45 CFR section 263.2(e) and 75.306. We do not agree that a certification alone from a third party meets the definition of a verifiable cost from third -party records.
Finding Reference Number: 2022-023 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Federal Reporting Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Health and Human Services (the Department) passed through $3,307,974 in Temporary Assistance to Needy Families funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 6 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, to ensure timely and accurate FFATA reporting. The Department uses a matrix to assist in the submission of FFATA reports, however, this schedule is not maintained and is overridden each time a new report is filed, resulting in our inability to validate the amount of the award amount reported for reach report tested within our sample. Effect The effect of the condition found is that the Department did not have sufficient internal controls in accordance with 2 CFR section 200.303. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials The Department partially concurs as follows: The Department?s position is that it maintains compliance with the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The Department agrees that during the year ended June 30, 2022, not all of the tested FFATA reports were deemed complete and accurate due to internal control considerations. The Department will review current practices regarding the internal control of financial information included in the G&C PDF?s which are the basis of the FFATA reporting with the objective of accurately reporting the specific amounts of Federal Funding content by FAIN so as to facilitate the accurate and timely reporting of FFATA in accordance with the Act. Anticipated Completion Date: September 30, 2023 Contact Person: PJ Nadeau, Administrator
Finding Reference Number: 2022-024 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provisions: Penalty for Failure to Comply with Work Verification Plan Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-025 Statistically Valid Sample: No The State agency must maintain adequate documentation, verification, and internal control procedures to ensure the accuracy of the data used in calculating work participation rates. In so doing, it must have in place procedures to (a) determine whether its work activities may count for participation rate purposes; (b) determine how to count and verify reported hours of work; (c) identify who is a work eligible individual; and (d) control internal data transmission and accuracy. Each State agency must comply with its HHS-approved Work Verification Plan in effect for the period that is audited. HHS may penalize the State by an amount not less than one percent and not more than five percent of the SFAG for violation of this provision (42 USC 601, 602, 607, and 609); 45 CFR sections 261.60, 261.61, 261.62, 261.63, 261.64, and 261.65). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork related to compliance with the New Hampshire Department of Health and Human Services (the Department) work verification plan we noted the following: A. For 5 of 60 participants selected for testwork, the participant did not have a signed active employment plan for the period selected for testwork. As there was no active employment plan, we were unable to verify if the participant was in compliance with their required work requirements for the period tested. B. For 7 of 60 participants selected for testwork, there was insufficient documentation to support the number of hours worked within the New Heights system for the participant. Cause The cause of the condition found was a result of inadequate review internal controls in place to ensure that participants have an active signed employment plan in place, that sufficient documentation is maintained to support the number of work hours reported by participants, and that the hours worked is accurately reported within the New Heights system. Effect The effect of the condition found is that the State may not be in compliance with its work verification plan and would not be able to identify the noncompliance. Questioned Costs Not determinable. Recommendation We recommend that the Department enhance its existing internal controls and procedures to ensure that participant employment plans are obtained, documentation used to support participant work hours is maintained, that the hours reported agree to the documented hours worked and that the work hours are accurately reflected within the New Heights system. View of Responsible Officials We concur with the finding. Corrective Action: Condition A The Bureau of Employment Supports has been undergoing massive programmatic changes over the past 2 to 3 years. As part of those changes, there has been an updated Work Verification Plan submitted which will help to address some areas where errors have occurred. Keeping in mind that for a period of close to 2 years, due to the COVID pandemic, NHEP was not holding participants accountable for not returning signed employment plans to NHEP staff. The focus for that time was to ensure that families were housed, fed and safe, therefore, services focused on their immediate needs. Participants who entered the NHEP program during that time were not held accountable to returning a signed employment plan therefore it did not become part of their routine with NHEP. While COVID restrictions have been lifted, participants seem to have needed some time to reintegrate into the NHEP program and the mandatory expectations. NHEP staff and leadership will continue to remind participants and become more diligent in ensuring that signed employment plans are on the forefront of their daily responsibilities. It should be noted that in a couple of instances, employment plans were created as part of a Service Determination Appointment and very quickly after the participant was deemed exempt from the Work Program (NHEP) so the employment plan was not necessary and became a moot point. A Director?s Memo will be sent out by the end of this week which will allow Employment Plans to be acknowledged and accepted by the participant in multiple ways (not just with a wet signature) thereby increasing the likelihood of participants returning accepted employment plans to NHEP staff. Making this shift will mitigate the difficulties that are causing participants to not return their signed employment plans to NHEP staff and will decrease instances where there is not an accepted employment plan on file. NHEP leadership will hold a state wide mandatory staff training where ways to prioritize the monitoring and obtainment of accepted employment plans will be outlined and discussed. Field Support Managers will continue to monitor their staff on a quarterly basis, however, will add a monthly check on having accepted employment plans to their responsibilities. Condition B Part of the changes that NHEP has implemented have included a new Activity Tracking form which has made tracking hours more efficient and easier for the participant as well as the Employment Counselor. We believe that this activity tracker as well as the decrease in mandatory forms will allow for more accuracy and fewer errors moving forward. Uploading documents into the e-folder was found to be error prone, therefore, on March 1, 2023, NHEP leadership provided guidance and training on a specific process of indexing and scanning documents to ensure that moving forward the Employment Counselors are checking their e-folder?s to ensure that documents are properly uploaded and visible. This process was initially sent out to the field as a suggestion in 9/2022, however, on 3/1/23 this process was sent out as an expected process moving forward. Also, through cursory investigations, we believe that this new process, combined with the new Activity Tracking form, has already shown to be effective in improving the accuracy of supporting and recording hours. NHEP leadership has also been working with the NEW HEIGHTS system to streamline the process of uploading documents to further decrease the potential for errors. A change request form was submitted approximately one year ago. Also during the time period of this audit, NHEP was requiring pay stubs from employed participants and completing ?overrides? of the number of work hours that a participant worked during the week if that number was different than what was auto-populating based on information obtained by and entered by eligibility. NHEP discontinued that practice. NHEP no longer requires pay stubs from participants as that is a function of eligibility. NHEP utilizes the number of hours worked per week based on the number of hours entered by eligibility. This change will ensure that employment hour errors no longer occur. In order to address issues of audit findings, within the next 90 days, NHEP leadership is holding a state wide mandatory staff training where more in-depth information on the audit process will be shared including audit ?tests?, ?questions? and ?corrective action plans?. Historically in NH, the audit process was not shared with the NHEP staff making them unaware of the expectations and/or findings of the audit. NHEP staff were trained to complete certain processes and enter particular data but were never able to connect that back to anything. While we have been introducing this process more and more to our staff, we intend to hold a training to help them more thoroughly understand why they are doing what they are doing and remind them that what they do is reviewed for accuracy as part of the federal audit process. We believe that this transparency will create buy-in from the staff to put systems in place for themselves and to self-monitor more. Anticipated Completion Date: December 31, 2023 Contact: Brigitte Bowmar, Program and Workforce Administrator III
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-020 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provisions: Child Support Non-Cooperation Type of Finding: Significant Deficiency Prior Year Finding: 2021-023 Statistically Valid Sample: No Criteria If the State agency responsible for administering the State plan under Title IV-D of the Social Security Act determines that an individual is not cooperating with the State in establishing paternity, or in establishing, modifying or enforcing a support order with respect to a child of the individual, and reports that information to the State agency responsible for TANF, the State TANF agency must (1) deduct an amount equal to not less than 25% from the TANF assistance that would otherwise be provided to the family of the individual and (20 may deny the family any TANF assistance. Health and Human Services (HHS) may penalize a State for up to 5% of the SFAG for failure to substantially comply with this required State child support program (45 CFR sections 264.30 and 264.31) Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our testwork over sanctions imposed for child support non-cooperation, we noted the following: A. For 1 of 9 cases selected for testwork, we noted that while the date of non-cooperation was September 14, 2021, the Department did not assess the required sanction for non-cooperation until the October 16, 2021 benefit payment period, resulting in the participant being overpaid approximately $222. B. As part of our testwork over sanctions imposed on single custodial parents of children under the age of 6, we noted that for 1 of 7 cases selected for testwork, the participant was not sanctioned due to inability to obtain childcare, but instead the case was sanctioned due to child support non-cooperation. Per review of the participant case file, the letter of non-cooperation required to establish the sanction was not maintained within the case file. As a result, it was unclear if the participant should have been sanctioned. Cause The cause of the condition found was a result of insufficient internal controls in place to ensure that required forms are obtained and maintained within the participant?s case file and to ensure that sanctions are applied timely and appropriately. Effect The effect of the condition found is that a breakdown in internal controls allowed for participant benefit payments to be inaccurate resulting in unallowable costs charged to the federal program or sanctions could have been imposed that were not appropriate. Questioned Costs $222 ? the overpayment in condition A above. Recommendation We recommend that the Department continue to enhance its existing internal controls and procedures to ensure the documentation used to support the beginning and termination of sanction periods is maintained and timely communicated so that sanctions are applied to participant benefit payments timely and appropriately. View of Responsible Officials Condition A We concur. The department received the notice of non-cooperation on 9/14/21 and did not enter the non-cooperation until 9/29/21, which was beyond the 10-day time frame. The case should have then been confirmed to impose the sanction on or before 9/24/21. This resulted in the client being over issued by approximately $222.37. Condition B We concur. The sanction for non-cooperation with Child Support was entered in error as Child Support did not issue a non-compliance. This resulted in the client being under issued by approximately $446.50 Follow-up We will be informing all supervisors of the specific errors found during the audit. We will also require supervisors to include these topics at their next staff meeting. In addition, individual emails will be sent to the staff involved with the errors and provide guidance. Anticipated Completion Date: N/A Contact Person: Karyl Provost
Finding Reference Number: 2022-021 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: NA Statistically Valid Sample: No Criteria5 A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 4. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Temporary Assistance for Needy Families program (TANF), the New Hampshire Department of Health and Human Services (the Department) enters into grant agreements with local entities to provide services to support eligible participants. During the year ended June 30, 2022, the Department passed through $3,307,974 to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following: A. For 1 of 7 subrecipients selected for testwork, per review of the grant agreement, we noted that the agreement did not contain any funding to be paid under the TANF program and should not have been identified as a TANF subrecipient. The total amount paid to the entity was $13,530. B. The Department communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for 4 of the remaining 6 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. The subrecipient?s unique identifier was not communicated for 1 of the remaining 6 subrecipients selected for testwork b. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) was not communicated for 2 of the remaining 6 subrecipients selected for testwork c. Identification of whether the award is R&D was not communicated for 4 of the remaining 6 subrecipients selected for testwork. C. The Department did not perform a risk assessment for all subrecipients selected for testwork. As a result, it is unclear if any additional targeted subrecipient monitoring should have been performed. D. For 1 of the remaining 6 subrecipients selected for testwork, there was no evidence that a programmatic monitoring review was completed for the subrecipient as required by their subrecipient monitoring policy. As there was no risk assessment performed for the subrecipient, it was unclear as to whether a programmatic monitoring visit should have been performed. Cause The cause of the condition found is primarily due to insufficient internal controls and procedures to ensure that federal reimbursement of expenditures are only disbursed to entities that have an approved subrecipient grant agreement. In addition, there are insufficient internal controls and procedures to ensure that award identification information is properly communicated with grant agreements and that risk assessments are performed to ensure sufficient during the awarded monitoring is performed over all subrecipients. Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a), section 200.332(b), CFR section 200.521 and 2 CFR sections 200.332(d) through (f). Questioned Costs $13,530 ? the amount in bullet A above. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that the Department complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b), 2 CFR sections 200.332(d) through (f), and 2 CFR section 200.251. This would include ensuring that: 1. The Department has an approved subrecipient grant agreement prior to making any disbursements to an entity; 2. All required award information is communicated to subrecipients; 3. A documented risk assessment is performed over all subrecipients, and the results of that risk assessment is used to evaluate the types of monitoring procedures that will be performed over the subrecipient; and 4. As a result of the risk assessment performed, monitoring activities are performed over subrecipients to ensure compliance with the terms and conditions of its subrecipient grant agreement. View of Responsible Officials A. We concur with this finding. The Department utilized an internally available copy of the Management Log, which lists vendor?s determinations. This is a copy of the log, not the original, official copy. There is a delay in updating this copy from the original, and incorrect information had been initially entered. The Department is moving this log to software which allows all Department employees to view the same log, while limiting the number of individuals who have access to make changes. Implementation has been completed as of March 2023. B. We concur with this finding. However, we believe this was an isolated incident as the TANF CFDA number (93.558) used was very similar to correct CFDA number (93.778) that should have been documented. C. 200.332 requirements a. We do not concur with this finding. The contract for Mt Prospect became effective 8/4/21, prior to the 4/22 inception of the UEI. The DUNS number, as in effect at that time, is noticed in Exhibit J of the contract. b. We concur with three of the four findings. Two of the four contracts pre-date the template update requiring the notice an indirect cost rate. Indirect cost rate for federal awards (including if the de minimis rate is charged per 2 CFR section 200.414) were added to Exhibit C of the Department?s contracts in April 2020. One of the contracts did not indicate an indirect cost rate as required. One of the contracts notes the indirect cost rate in the Notes of their financial details. c. One of the two contracts pre-dates the template update requiring the notice the identification of R&D. R&D identifications for federal awards were added to Exhibit C of the Department?s contracts in April 2020 One of the two contracts did not identify whether the contract was R&D as required. D. Subrecipient Risk Assessment ? We concur with the finding. We consider the finding to be fully resolved through Department policy Department policy and Department wide implementation. However, it should be noted full compliance will not be achieved for one to two contact cycles due to timing. The Department began addressing the issue of Subrecipient Monitoring issue in June 2017 when the first Grants Administrator was hired. The Department finalized the Subrecipient Monitoring Policy, which encompasses the financial and programmatic risk assessments as well as the subrecipient monitoring, on June 1, 2018. The Department provided user training on the subject in February and September 2018, training over one hundred forty-six staff. However, only brand new procurements utilized this policy during the initial roll out of this policy. The Department hired a new Grants Administrator in May 2019. The full Subrecipient Monitoring policy rolled out to all procurements, including sole source, amendments, and renewals, effective August 1, 2020. The Contracts Unit received specialized subrecipient monitoring training on May 13 and October 28, 2020. Department wide training to all staff occurred weekly between September 8 and November 3, 2020. The Grants Office provided additional targeted training to Program staff through team meetings. Over one hundred fifty Program and Finance staff received training. Annual training will be held in September each year. Refresher training or training for new staff is available upon request from the Grants Office. The Grants Office website offers Program, Finance, and Contracts Bureau staff access to the subrecipient monitoring policy, as well as training modules, slides, and tools. The training has also been recorded and is available on this site. The Subrecipient Monitoring Policy requires Program to determine whether any vendor which receives funds in exchange for goods or services is a Contractor or Subrecipient. Determined subrecipients receive a Management Questionnaire, which includes a ten question questionnaire and requirements for submitting financial data. This information is used to populate the Risk Assessment Tool, which shows any risks pertinent to a subrecipient and the subaward. Based on the risks shown, Program chooses monitoring activities to mitigate the risks and the Contracts Bureau memorializes these choices in the contract. The Grants Office continues to work closely with the Contracts Bureau to ensure compliance with the Subrecipient Monitoring policy. C. and D. It is also important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates, which did not include the required notifications under 200.332, were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required notifications for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. E. We concur there was no formal documentation of any monitoring activity. Due to staff turnover a new administrator has been hired and unable to furnish the monitoring that took place during FY22. However, a program site review during FY23 was performed and financial monitoring of invoices has also taken place. Anticipated Completion Date: July, 2023 Contact Person: Melissa Kelleher, Administrator Rejoinder As documented above in Bullet B of the condition found, the Department did not properly communicate all required award information to the subrecipient. Once aware of the noncompliance, the Department should have timely communicated this information to its subrecipients.
Finding Reference Number: 2022-022 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Matching, Level of Effort and Earmarking ? Maintenance of Effort Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-024 Statistically Valid Sample: No Criteria Every fiscal year, a State must maintain an amount of ?qualified state expenditures? (as defined in 42 US609(a)(7)(B) and 45 CFR section 263.2) for eligible families (as defined in 42 USC 609(a)(7)(B)(i)(IV) and 45 CFR section 263.2(b)) at least at the applicable percentage of the State?s historic State expenditures. Qualified expenditures with respect to eligible families may come from all programs. This requirement may be met through allowable state or local cash expenditures for goods and services, cash donations by non-governmental third parties, or the value of third-party in-kind contributions. A State?s records must show that all costs are verifiable and meet all applicable requirements in 45 CFR sections 263.2 through 263.6.45. Additionally, 45 CFR 75 section 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition For the federal fiscal year end September 30, 2021, the New Hampshire Department of Health and Human Services (the Department) was required to meet an annual maintenance of effort (MOE) requirement of $32,115,003. The Department MOE expenditures during this period of $38,072,519, which exceeded the MOE required amount by $5,957,519. Of the MOE expenditures incurred, $10,957,419 represented in-kind contributions from 15 community organizations. On an annual basis, each community organization completes a Temporary Assistance for Needy Families (TANF) MOE form to report expenses that qualify as TANF expenditures. The form requires a description of the program operations, what TANF purpose the program addresses, the number of families served, and the amount of eligible expenditures in total. The form is signed by the organization and submitted to the Department to serve as the supporting documentation for the in-kind contribution provided by the community organization. No additional documentation is provided by the community organization to support the amount of the expenditures included on the form. The Department does not perform procedures to ensure expenditures reported by the community organization are accurate and represent valid expenditures that were incurred to support the program outlined within the form and in turn to ensure the in-kind contribution used to support the required MOE is appropriate. Cause The cause of the condition found was a result of insufficient internal controls and procedures to ensure the expenditures reported by the community organizations are properly supported by valid expenditures that meet the criteria of qualified TANF expenditures. As the Department enters into a memorandum of understanding (MOU) with each community organization that outlines the types of costs that are allowable sources of MOE and obtains a signed certification from each organization as to the amount of expenditures incurred, the Department indicated that the support provided is sufficient and therefore does not validate the information for accuracy. Effect The effect of the condition found is that the Department may not meet the required annual MOE requirement as in-kind contributions may not be complete or represent qualified expenditures and does not have internal controls and procedures in place to identify noncompliance timely. Questioned Costs Not determinable. Recommendation We recommend that the Department implement internal controls and procedures to ensure that in-kind contributions used to support MOE are reviewed to ensure that the expenditures are accurate and meet the definition of qualifying expenditures. View of Responsible Officials We do not concur. The expenditures outlined are considered verifiable costs via the Memorandum of Understanding (MOU) and the Maintenance of Effort (MOE) forms completed by the third party agency. As part of the June 30, 2018 audit a similar finding is noted which we also did not concur with as part of that audit. The department has since been in contact and had meetings with the Federal Administration for Children and Families (ACF). In addition, a formal response was provided by ACF on August 31, 2022 that stated they are hoping to resolve this outstanding issue soon. We are currently awaiting the Federal Administration for Children and Families (ACF) decision concerning this finding and as such, we do not believe any corrective action is required. Anticipated Completion Date When the decision from ACF is given we will respond accordingly. Until then no corrective action is considered necessary. Contact Person: Mary Calise, Deputy Chief Financial Officer, Depart. of Health and Human Services Rejoinder The Department stated in their response that it verifies the completeness and accuracy of the third-party in-kind match through the MOU entered into and the MOE forms that the providers submit. Per review of the signed certifications (or the MOE forms), we noted the certification contains a description of the general purpose of the program, an identification of the TANF purpose the program addresses, the number of families/individuals served, the expenses incurred under the program, excluding any federal and state funds received. While we were provided with documentation to support that the third-party certifications were received, we were not provided with evidence to support the Department had performed additional procedures to verify the incurred costs were complete and accurate as required by 45 CFR section 263.2(e) and 75.306. We do not agree that a certification alone from a third party meets the definition of a verifiable cost from third -party records.
Finding Reference Number: 2022-023 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Federal Reporting Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Health and Human Services (the Department) passed through $3,307,974 in Temporary Assistance to Needy Families funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 6 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, to ensure timely and accurate FFATA reporting. The Department uses a matrix to assist in the submission of FFATA reports, however, this schedule is not maintained and is overridden each time a new report is filed, resulting in our inability to validate the amount of the award amount reported for reach report tested within our sample. Effect The effect of the condition found is that the Department did not have sufficient internal controls in accordance with 2 CFR section 200.303. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials The Department partially concurs as follows: The Department?s position is that it maintains compliance with the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The Department agrees that during the year ended June 30, 2022, not all of the tested FFATA reports were deemed complete and accurate due to internal control considerations. The Department will review current practices regarding the internal control of financial information included in the G&C PDF?s which are the basis of the FFATA reporting with the objective of accurately reporting the specific amounts of Federal Funding content by FAIN so as to facilitate the accurate and timely reporting of FFATA in accordance with the Act. Anticipated Completion Date: September 30, 2023 Contact Person: PJ Nadeau, Administrator
Finding Reference Number: 2022-024 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provisions: Penalty for Failure to Comply with Work Verification Plan Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-025 Statistically Valid Sample: No The State agency must maintain adequate documentation, verification, and internal control procedures to ensure the accuracy of the data used in calculating work participation rates. In so doing, it must have in place procedures to (a) determine whether its work activities may count for participation rate purposes; (b) determine how to count and verify reported hours of work; (c) identify who is a work eligible individual; and (d) control internal data transmission and accuracy. Each State agency must comply with its HHS-approved Work Verification Plan in effect for the period that is audited. HHS may penalize the State by an amount not less than one percent and not more than five percent of the SFAG for violation of this provision (42 USC 601, 602, 607, and 609); 45 CFR sections 261.60, 261.61, 261.62, 261.63, 261.64, and 261.65). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork related to compliance with the New Hampshire Department of Health and Human Services (the Department) work verification plan we noted the following: A. For 5 of 60 participants selected for testwork, the participant did not have a signed active employment plan for the period selected for testwork. As there was no active employment plan, we were unable to verify if the participant was in compliance with their required work requirements for the period tested. B. For 7 of 60 participants selected for testwork, there was insufficient documentation to support the number of hours worked within the New Heights system for the participant. Cause The cause of the condition found was a result of inadequate review internal controls in place to ensure that participants have an active signed employment plan in place, that sufficient documentation is maintained to support the number of work hours reported by participants, and that the hours worked is accurately reported within the New Heights system. Effect The effect of the condition found is that the State may not be in compliance with its work verification plan and would not be able to identify the noncompliance. Questioned Costs Not determinable. Recommendation We recommend that the Department enhance its existing internal controls and procedures to ensure that participant employment plans are obtained, documentation used to support participant work hours is maintained, that the hours reported agree to the documented hours worked and that the work hours are accurately reflected within the New Heights system. View of Responsible Officials We concur with the finding. Corrective Action: Condition A The Bureau of Employment Supports has been undergoing massive programmatic changes over the past 2 to 3 years. As part of those changes, there has been an updated Work Verification Plan submitted which will help to address some areas where errors have occurred. Keeping in mind that for a period of close to 2 years, due to the COVID pandemic, NHEP was not holding participants accountable for not returning signed employment plans to NHEP staff. The focus for that time was to ensure that families were housed, fed and safe, therefore, services focused on their immediate needs. Participants who entered the NHEP program during that time were not held accountable to returning a signed employment plan therefore it did not become part of their routine with NHEP. While COVID restrictions have been lifted, participants seem to have needed some time to reintegrate into the NHEP program and the mandatory expectations. NHEP staff and leadership will continue to remind participants and become more diligent in ensuring that signed employment plans are on the forefront of their daily responsibilities. It should be noted that in a couple of instances, employment plans were created as part of a Service Determination Appointment and very quickly after the participant was deemed exempt from the Work Program (NHEP) so the employment plan was not necessary and became a moot point. A Director?s Memo will be sent out by the end of this week which will allow Employment Plans to be acknowledged and accepted by the participant in multiple ways (not just with a wet signature) thereby increasing the likelihood of participants returning accepted employment plans to NHEP staff. Making this shift will mitigate the difficulties that are causing participants to not return their signed employment plans to NHEP staff and will decrease instances where there is not an accepted employment plan on file. NHEP leadership will hold a state wide mandatory staff training where ways to prioritize the monitoring and obtainment of accepted employment plans will be outlined and discussed. Field Support Managers will continue to monitor their staff on a quarterly basis, however, will add a monthly check on having accepted employment plans to their responsibilities. Condition B Part of the changes that NHEP has implemented have included a new Activity Tracking form which has made tracking hours more efficient and easier for the participant as well as the Employment Counselor. We believe that this activity tracker as well as the decrease in mandatory forms will allow for more accuracy and fewer errors moving forward. Uploading documents into the e-folder was found to be error prone, therefore, on March 1, 2023, NHEP leadership provided guidance and training on a specific process of indexing and scanning documents to ensure that moving forward the Employment Counselors are checking their e-folder?s to ensure that documents are properly uploaded and visible. This process was initially sent out to the field as a suggestion in 9/2022, however, on 3/1/23 this process was sent out as an expected process moving forward. Also, through cursory investigations, we believe that this new process, combined with the new Activity Tracking form, has already shown to be effective in improving the accuracy of supporting and recording hours. NHEP leadership has also been working with the NEW HEIGHTS system to streamline the process of uploading documents to further decrease the potential for errors. A change request form was submitted approximately one year ago. Also during the time period of this audit, NHEP was requiring pay stubs from employed participants and completing ?overrides? of the number of work hours that a participant worked during the week if that number was different than what was auto-populating based on information obtained by and entered by eligibility. NHEP discontinued that practice. NHEP no longer requires pay stubs from participants as that is a function of eligibility. NHEP utilizes the number of hours worked per week based on the number of hours entered by eligibility. This change will ensure that employment hour errors no longer occur. In order to address issues of audit findings, within the next 90 days, NHEP leadership is holding a state wide mandatory staff training where more in-depth information on the audit process will be shared including audit ?tests?, ?questions? and ?corrective action plans?. Historically in NH, the audit process was not shared with the NHEP staff making them unaware of the expectations and/or findings of the audit. NHEP staff were trained to complete certain processes and enter particular data but were never able to connect that back to anything. While we have been introducing this process more and more to our staff, we intend to hold a training to help them more thoroughly understand why they are doing what they are doing and remind them that what they do is reviewed for accuracy as part of the federal audit process. We believe that this transparency will create buy-in from the staff to put systems in place for themselves and to self-monitor more. Anticipated Completion Date: December 31, 2023 Contact: Brigitte Bowmar, Program and Workforce Administrator III
Finding Reference Number: 2022-025 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-027 Statistically Valid Sample: No Criteria A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 4. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Low-Income Home Energy Assistance program (LIHEAP), the New Hampshire Department of Energy (the Department) enters into grant agreements with local entities to provide services related to the eligibility determination process for the LIHEAP program (including the calculation of participant benefits) and payment of benefits to fuel providers. During the year ended June 30, 2022, $37,990,873 was passed through to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following as of the year ending June 30, 2022: A. The Department communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for each of the 3 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. Federal Award Identification Number (FAIN) b. Federal award date c. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) d. Identification of whether the award is R&D B. The Department performed a risk assessment for each of the 3 subrecipients selected for testwork. As part of the risk assessment process, a score was given to each subrecipient with corresponded to a particular risk assessment, such as higher or average risk. The Department however does not have a formal risk assessment policy so it was unclear what additional monitoring procedures should have been performed for each subrecipient based upon their assigned risk. C. For 2 of 3 programmatic monitoring reviews selected for testwork, the Department did not tissue its programmatic monitoring reports to the subrecipient timely after the monitoring review was completed. As a result, there was a delay in the subrecipient implementing its corrective action plan to address the findings identified during the programmatic monitoring review. Specifically, we noted the following: a. For 1 of 2 programmatic monitoring reviews, the monitoring review took place on April 14, 2022, but the report to the subrecipient was not issued until September 2022. Per review of the report that was issued, there were findings identified by the Department that warranted corrective action. Due to the delay in issuing the report, a corrective action plan was not obtained from the subrecipient until 5 months after the date of that the monitoring review took place b. For 1 of 2 programmatic monitoring reviews, the monitoring review took place on April 12, 2022, but the report to the subrecipient was not issued until July 2022. Per review of the report that was issued, there were findings identified by the Department that warranted corrective action. Due to the delay in issuing the report, a corrective action plan was not obtained from the subrecipient until 3 months after the date that the monitoring review took place. D. For all 3 subrecipients selected for testwork, the Department did not complete its annual fiscal monitoring review during the audit period as required by their monitoring policy. E. During our testwork over the Department?s review of subrecipient uniform guidance reports, we noted the following: a. The Department does not track the receipt of uniform guidance reports. As a result, we were unable to determine when the uniform guidance reports were received by the Department to ensure they are reviewed timely. Specifically, we noted: i. For 1 of 3 subrecipients, the subrecipient?s uniform guidance appeared to have been reviewed, but as the Department does not track the receipt of uniform guidance reports, it was unclear if it was reviewed timely. We did note based on the date that the uniform guidance report was issued, the management decision letter was not issued within 6 months of the date of the report being issued as required by 2 CRF 200.521 (d). ii. For 2 of 3 subrecipients selected for testwork, we were unable to obtain evidence to support that the Department had obtained and reviewed the subrecipient?s uniform guidance report. F. The Annual Report on Households Assisted by LIHEAP contains data that is specific to benefits paid to eligible participants. The data that is used to compile the annual report is obtained from case data that is reported to the New Hampshire Department of Energy (the Department) from its subrecipients as the Department has entered into grant agreements with third parties who are responsible for the eligibility determination and benefit payment process. As part of our subrecipient monitoring testwork, we were unable to verify that the Department had performed any monitoring procedures over the data provided by each subrecipient to ensure that the data reported within the annual report was complete and accurate. Cause The cause of the condition found was primarily due to insufficient documented subrecipient policies and procedures to ensure that adequate monitoring is performed over subrecipients to align with the risk assessments performed. The monitoring procedures that are in place to not include the completeness and accuracy of the data submitted by the subrecipient utilized to compile federal reports. Further, the Department does not have sufficient internal controls and procedures to ensure results of monitoring visits are performed and results communicated timely to subrecipient or to ensure that subrecipient uniform guidance reports are obtained and reviewed timely. In addition, there are insufficient internal controls in place to review the grant agreements to ensure that all required data elements are communicated to the subrecipient in accordance with 2 CFR section 300.332(b). Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a), section 200.332(b) and 2 CFR section 200.521. Questioned Costs None. Recommendation We recommend that the Department formalize, policies and procedures and implement the necessary internal controls to ensure that the Department complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b) and 2 CFR section 200.251. This would include ensuring that: 1. All required award information is communicated to subrecipients; 2. A documented risk assessment is performed over all subrecipients and the results of that risk assessment is used to evaluate the types of monitoring procedures that will be performed over the subrecipient including the review of data utilized by the Department to compile federal reports; 3. As a result of the risk assessment performed, monitoring activities are performed over subrecipients to ensure compliance with the terms and conditions of its subrecipient grant agreement. The results of all monitoring reviews should be timely communicated in accordance with the Department?s policies to the subrecipient and actions requiring corrective action plan should be followed up on to ensure that the matter is resolved; and 4. Ensure that all uniform guidance reports are collected and reviewed timely so that a management decision letter can be issued within the time period required by federal regulations. View of Responsible Officials The Department of Energy recognizes the need to include all required information to be communicated to sub-recipients, and that all sub-recipients? risk assessments are thoroughly completed. In addition, uniform guidance reports need to be collected and reviewed to ensure that management letters be issued within the required timeframe. Anticipated Completion Date: Ongoing Contact Person Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-026 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-028, 2021-029 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The Low-Income Home Energy Assistance program (LIHEAP), Performance Data Form (OMB No. 0970-0106) is required to be submitted before January 1st indicating the amount expected to be carried forward for obligation in the following fiscal year and the planned use of those funds. LIHEAP Carryover and Reallotment Report (OMB No. 0970-0106) ? Grantees must submit this report no later than August 1 indicating the amount expected to be carried forward for obligation in the following fiscal year and the planned use of those funds. Funds in excess of the maximum carryover limit are subject to reallotment to other LIHEAP grantees in the following fiscal year and must also be reported (42 USC 8626). The SF-425, Federal Financial Report, is required to be filed annually. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over federal reporting as part of the Low-Income Home Energy Assistance program (LIHEAP), we noted the following: A. The New Hampshire Department of Energy (the Department) during the year ended June 30, 2022, $37,990,873 was passed through to subrecipients that met the requirements for first tier subawards under the Transparency Act and as such FFATA reports were required to be filed for each of those subawards. During the period ending June 30, 2022, the Department did not file the required FFATA reports. B. The annual LIHEAP Performance Data Form was not submitted by January 31, 2022. The Department contacted the regulator in May of 2022 requesting an extension which was approved, however as of the date of testwork in December 2022 the report still has not been submitted. C. Per review of the LIHEAP Carryover and Reallotment Report filed during our audit period, we noted that line 1.3 for the regular block grant carryover amount was $530,288, which was less than the maximum allowed carryover amount of $2,771,886. As part of our testwork, we were unable to obtain documentation to support that the amount reported on the federal report was accurate. Based on discussions with the Department, they indicated that the amount reported represented the unobligated balance as of June 30, 2021 as the federal report is due by August 1, 2021. However, we further noted that the unobligated balance for the federal grant as filed on its annual SF-425 report as of September 30, 2021 which would incorporate an additional 3 months of obligations, reported an unobligated balance of $979,648, which is greater than what was reported on the LIHEAP Carryover and Reallotment Report. D. 1 of 3 SF-425 federal reports selected for testwork that the New Hampshire Department of Energy (the Department) did not use the correct indirect cost rate when compiling the report. Instead of using a rate of 30.40%, the Department used a rate of 30.45%, resulting in indirect costs being over reported on the report by approximately $13. Cause The cause of the condition found was primarily due to insufficient resources within the Department to ensure the federal reports were filed or filed timely as well as insufficient policies and procedures to ensure that the documentation to support the amount reported on the LIHEAP Carryover and Reallotment Report. Based on inquiry with management, the Department at the time of the filing of the SF-425 report, the cognizant agency had not approved its proposed indirect cost rate so an older rate was used. The report was not subsequently revised once the rate was approved in April of 2022. Effect The effect of the condition found is that the Department did not file the required FFATA reports and the annual LIHEAP Performance Data Form and the LIHEAP Carryover and Reallotment Report and SF-425 reports may not have been filed accurately. Questioned Costs None. Recommendation We recommend that the Department should review to ensure there is sufficient safeguards in place for professionals to perform when positions are vacant so that necessary processes are completed related to compliance with federal requirements, including federal reporting requirements related to the timely submission of the annual LIHEAP Performance Report and the submission of FFATA reports for first-tier subawards. In addition, we recommend that the Department implement written policies and procedures for the compilation of the annual LIHEAP Carryover and Reallotment report and ensure that the documentation to support the amounts reported is maintained to support that the report is complete and accurate. Finally we recommend that the Department review its policies and procedures to ensure that the appropriate indirect cost rate is used within the SF-425 reports. View of Responsible Officials The Department of Energy recognizes the FFATA reporting requirement was not met due to insufficient resources in FY22 while completing an agency merger. The Department is adjusting our internal procedures and processes where necessary to address any and all deficiencies in our reporting requirements and we are currently training new staff on reporting regulations and processes. The corrective action to ensure that the annual Performance Report is filed timely is recognized. This was due to a lack of staffing to complete the report in a timely manner. A new associate position is being created and staffed at the NH Department of Energy to prevent this situation going forward. For the Carryover and Reallotment report, Additional support staff in both the Fiscal and Program offices for LIHEAP are being recruited and trained. This will ensure that adequate policies and procedures can be developed and implemented. For the SF-425 report, the Department of Energy disagrees with this finding. The expense was calculated at the agency?s calculated and submitted Indirect Cost Rate Proposal (30.45%) to our cognizant agency the US DHHS on December 30, 2020. Our proposal was not reviewed/approved by US DHHS until May 02, 2022 at the rate of 30.40%. Energy calculates and expenses indirect cost on a quarterly basis. At the time that the rate was calculated (after 9/30/2021) for FFY22 Q1, no response was received from US DHHS as to our proposal, therefore, per the recommendation of the Admin Services ? Comptroller?s office, the proposed rate of 30.45% was used to calculate the Indirect Cost expense for FFY22 Q1. The over reported charge was not due to ?insufficient review controls?. I did provide in our backup materials in PBC#38 the late response from US DHHS acknowledging the 30.4% rate to be approved and that acknowledgment is dated April 5, 2022 ? well beyond the time the expense was calculated for FFY22 Q1 expenses. Energy will continue to follow our established processes and procedures to ensure accurate federal grant expensing. Anticipated Completion Date: June 30, 2023 and September 30, 2023 for the Carryover and Reallotment Report Contact Person: Jane Lemire, Business Administrator (PT) and Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-027 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Cash Management Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria U.S. Department of the Treasury (Treasury) regulations at 31 CFR section 204 part 205 implement the Cash Management Act of 1990 (CMIA). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Catalog of Federal Domestic assistance that meet the funding threshold for a major federal program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1)). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over performed over cash management related to the Low-Income Home Energy Assistance program, we noted the following: A. Under the State of New Hampshire?s Cash Management Agreement (CMIA), direct expenditures are to be drawn using the actual draw ? monthly technique. Under this technique, the funds are to be requested monthly based on actual costs incurred during that 1-month period. The funding technique is interest neutral. During our testwork over the cash draw process, we noted the following: a. For 5 of 7 cash draws selected for testwork, the New Hampshire Department of Energy (the Department) did not draw funds timely resulting in the cash draw to be delinquent. Each of the 4 cash draw covered multiple months of activity. b. For 1 of 7 cash draws selected for testwork, the Department drew funds down in advance as the cash draw covered 27 days only for the month of March 2022. We further noted, that during the month of March 2022, the Department completed an additional cash draw that covered 3 days of activity. As the clearance pattern within the CMIA agreement is interest neutral, there was no interest impact because of the cash draws not being performed timely. B. The Department advances payments to subrecipients to ensure that they have sufficient cash on hand to pay for benefit payments. The Department passed through $37,990,873 to subrecipients during the year ended June 30, 2022. During our testwork over compliance with cash management, we noted that for 1 of 3 subrecipients selected for testwork, the Department provided an advance payment to the subrecipient for programmatic expense and the advanced funds were not fully used by the subrecipient for approximately 5 months. The Department?s normal disbursement cycle of every 30 days. As such, it does not appear that the Department sufficiently minimized the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes. In addition to the above, we noted that for the same subrecipient, the advance memo to authorize the advance payment was not signed by the Program and Fiscal Manager as required by the Department?s policies and procedures. Cause The cause of the condition found was primarily due to insufficient resources to monitor and track cash draws to ensure they are performed timely in accordance with the clearance patten established within the CMIA agreement and to ensure that subrecipients either utilize advance funds timely or effectively evaluate the amount of funds they need on hand at the time of the advance payment. Effect The effect of the condition found is that the Department did not comply with the provisions of the CMIA as it relates to the timing of cash draws. In addition, subrecipients had excess cash on hand as the Department did not minimize the time elapsing between the transfer of federal funds to the subrecipient and their disbursement of funds for program purposes. As such the Department was not in compliance with 2 CFR section 200.305(b)(1). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that all cash draws are performed timely and in accordance with the CMIA agreement. In addition, we recommend that the Department review its existing internal controls, policies and procedures relating to advancing funds to subrecipients to ensure that excess cash held by the subrecipients does not exceed 30 days. View of Responsible Officials Related to compliance with the CMIA, the Department of Energy acknowledges there were several instances where draws were not completed on a monthly basis for the prior month?s expenditures following the CMIA agreement in FY22. The Department of Energy has hired another staff person to complete business office grant-related tasks and will be reviewing and adjusting our policies and procedures if and where needed in the future. This staff person is still in training, therefore the completion date is not known at this time. Related to the timing of payments to subrecipients, due to staffing issues in both the Administrative and Fiscal offices, this recommendation is acknowledged and accepted. Support staff in both offices are being recruited and trained. This will ensure that adequate supervision and compliance of sub-recipient cash advances procedures are followed. Anticipated Completion Date: Ongoing Contact Person: Jane Lemire Business Administrator IV (PT) and Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-028 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2101NHLIE4 Federal Award Year: 2021 U.S. Department of Health and Human Services Compliance Requirement: Earmarking Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria No more than 10% of a state?s LIHEAP funds for a federal fiscal year may be used for planning and administrative costs, including both direct and indirect costs. This limitation applies, in the aggregate, to planning and administrative costs at both the state and subrecipient levels. This cap may not be exceeded by supplementing with other federal funds (42 USC 8624(b)(9)(A); 45 CFR section 96.88(a)). No more than 15 percent of the greater of the funds allotted or the funds available to the grantee for a federal fiscal year may be used for low-cost residential weatherization or other energy-related home repairs. The secretary may grant a waiver beginning April 1st, and the grantee may then spend up to 25 percent for residential weatherization or energy-related home repairs (42 USC 8624(k)). No more than 5 percent of the LIHEAP funds may be used to provide services that encourage and enable households to reduce their home energy needs and, thereby, the need for energy assistance. Such services may include needs assessments, counseling, and assistance with energy vendors (42 USC 8624(b)(16)). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition To ensure that the Department had met the required earmarking requirements related to administrative, weatherization and energy reduction service limitations, the New Hampshire Department of Energy (the Department) maintains a tracking sheet for each federal grant that tracks all expenditures by category. At the end of the grant period, the total expenditures are reconciled to the federal grant and costs incurred related to the earmarking requirements are calculated to ensure that the required limitations are not exceeded. During our testwork over earmarking, we noted that for 1 of 2 grants selected for testwork, the grant appeared to have meet the required earmarking requirements, however we were unable to test the completeness and accuracy of the underlying support. Further we were unable to reconcile the total expenditures contained within the underlying support to the final grant close out report (the SF-425) submitted for the grant. Cause The cause of the condition found is due to the Department is unable to submit a final close out report within the federal reporting portal as the portal does not contain an option to complete the required report. As a result, the last federal report filed for this grant was as of September 31, 2021, which was prior to the liquidation of all obligations under the grant. Effect The effect of the condition found is that the expenditures utilized to track compliance with the earmarking requirement may not reconcile to the final expenditures reported within the SF-425 resulting in noncompliance. Questioned Costs Not determinable. Recommendation We recommend that the Department continue to work with the federal government to ensure that all grants that are required to be closed out have a final SF-245 and that the final expenditures reported reconciles to the expenditures used to track the required earmarking requirements. View of Responsible Officials The Department of Energy is currently in contact and working with representatives from the US DHHS to resolve the fact that the SF-425 report is not available for updating at this time for grant #2001NHE5C3. It must be made available for updating within the HHS reporting site by DHHS in order for Grantees to edit and submit a report. Corrective Action We will continue to work with US DHHS for any grant awarded to us that has this same reporting issue in the future. Anticipated Completion Date: Ongoing Contact Person: Jane Lemire Business Administrator IV (PT)
Finding Reference Number: 2022-025 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-027 Statistically Valid Sample: No Criteria A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 4. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Low-Income Home Energy Assistance program (LIHEAP), the New Hampshire Department of Energy (the Department) enters into grant agreements with local entities to provide services related to the eligibility determination process for the LIHEAP program (including the calculation of participant benefits) and payment of benefits to fuel providers. During the year ended June 30, 2022, $37,990,873 was passed through to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following as of the year ending June 30, 2022: A. The Department communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for each of the 3 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. Federal Award Identification Number (FAIN) b. Federal award date c. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) d. Identification of whether the award is R&D B. The Department performed a risk assessment for each of the 3 subrecipients selected for testwork. As part of the risk assessment process, a score was given to each subrecipient with corresponded to a particular risk assessment, such as higher or average risk. The Department however does not have a formal risk assessment policy so it was unclear what additional monitoring procedures should have been performed for each subrecipient based upon their assigned risk. C. For 2 of 3 programmatic monitoring reviews selected for testwork, the Department did not tissue its programmatic monitoring reports to the subrecipient timely after the monitoring review was completed. As a result, there was a delay in the subrecipient implementing its corrective action plan to address the findings identified during the programmatic monitoring review. Specifically, we noted the following: a. For 1 of 2 programmatic monitoring reviews, the monitoring review took place on April 14, 2022, but the report to the subrecipient was not issued until September 2022. Per review of the report that was issued, there were findings identified by the Department that warranted corrective action. Due to the delay in issuing the report, a corrective action plan was not obtained from the subrecipient until 5 months after the date of that the monitoring review took place b. For 1 of 2 programmatic monitoring reviews, the monitoring review took place on April 12, 2022, but the report to the subrecipient was not issued until July 2022. Per review of the report that was issued, there were findings identified by the Department that warranted corrective action. Due to the delay in issuing the report, a corrective action plan was not obtained from the subrecipient until 3 months after the date that the monitoring review took place. D. For all 3 subrecipients selected for testwork, the Department did not complete its annual fiscal monitoring review during the audit period as required by their monitoring policy. E. During our testwork over the Department?s review of subrecipient uniform guidance reports, we noted the following: a. The Department does not track the receipt of uniform guidance reports. As a result, we were unable to determine when the uniform guidance reports were received by the Department to ensure they are reviewed timely. Specifically, we noted: i. For 1 of 3 subrecipients, the subrecipient?s uniform guidance appeared to have been reviewed, but as the Department does not track the receipt of uniform guidance reports, it was unclear if it was reviewed timely. We did note based on the date that the uniform guidance report was issued, the management decision letter was not issued within 6 months of the date of the report being issued as required by 2 CRF 200.521 (d). ii. For 2 of 3 subrecipients selected for testwork, we were unable to obtain evidence to support that the Department had obtained and reviewed the subrecipient?s uniform guidance report. F. The Annual Report on Households Assisted by LIHEAP contains data that is specific to benefits paid to eligible participants. The data that is used to compile the annual report is obtained from case data that is reported to the New Hampshire Department of Energy (the Department) from its subrecipients as the Department has entered into grant agreements with third parties who are responsible for the eligibility determination and benefit payment process. As part of our subrecipient monitoring testwork, we were unable to verify that the Department had performed any monitoring procedures over the data provided by each subrecipient to ensure that the data reported within the annual report was complete and accurate. Cause The cause of the condition found was primarily due to insufficient documented subrecipient policies and procedures to ensure that adequate monitoring is performed over subrecipients to align with the risk assessments performed. The monitoring procedures that are in place to not include the completeness and accuracy of the data submitted by the subrecipient utilized to compile federal reports. Further, the Department does not have sufficient internal controls and procedures to ensure results of monitoring visits are performed and results communicated timely to subrecipient or to ensure that subrecipient uniform guidance reports are obtained and reviewed timely. In addition, there are insufficient internal controls in place to review the grant agreements to ensure that all required data elements are communicated to the subrecipient in accordance with 2 CFR section 300.332(b). Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a), section 200.332(b) and 2 CFR section 200.521. Questioned Costs None. Recommendation We recommend that the Department formalize, policies and procedures and implement the necessary internal controls to ensure that the Department complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b) and 2 CFR section 200.251. This would include ensuring that: 1. All required award information is communicated to subrecipients; 2. A documented risk assessment is performed over all subrecipients and the results of that risk assessment is used to evaluate the types of monitoring procedures that will be performed over the subrecipient including the review of data utilized by the Department to compile federal reports; 3. As a result of the risk assessment performed, monitoring activities are performed over subrecipients to ensure compliance with the terms and conditions of its subrecipient grant agreement. The results of all monitoring reviews should be timely communicated in accordance with the Department?s policies to the subrecipient and actions requiring corrective action plan should be followed up on to ensure that the matter is resolved; and 4. Ensure that all uniform guidance reports are collected and reviewed timely so that a management decision letter can be issued within the time period required by federal regulations. View of Responsible Officials The Department of Energy recognizes the need to include all required information to be communicated to sub-recipients, and that all sub-recipients? risk assessments are thoroughly completed. In addition, uniform guidance reports need to be collected and reviewed to ensure that management letters be issued within the required timeframe. Anticipated Completion Date: Ongoing Contact Person Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-026 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-028, 2021-029 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The Low-Income Home Energy Assistance program (LIHEAP), Performance Data Form (OMB No. 0970-0106) is required to be submitted before January 1st indicating the amount expected to be carried forward for obligation in the following fiscal year and the planned use of those funds. LIHEAP Carryover and Reallotment Report (OMB No. 0970-0106) ? Grantees must submit this report no later than August 1 indicating the amount expected to be carried forward for obligation in the following fiscal year and the planned use of those funds. Funds in excess of the maximum carryover limit are subject to reallotment to other LIHEAP grantees in the following fiscal year and must also be reported (42 USC 8626). The SF-425, Federal Financial Report, is required to be filed annually. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over federal reporting as part of the Low-Income Home Energy Assistance program (LIHEAP), we noted the following: A. The New Hampshire Department of Energy (the Department) during the year ended June 30, 2022, $37,990,873 was passed through to subrecipients that met the requirements for first tier subawards under the Transparency Act and as such FFATA reports were required to be filed for each of those subawards. During the period ending June 30, 2022, the Department did not file the required FFATA reports. B. The annual LIHEAP Performance Data Form was not submitted by January 31, 2022. The Department contacted the regulator in May of 2022 requesting an extension which was approved, however as of the date of testwork in December 2022 the report still has not been submitted. C. Per review of the LIHEAP Carryover and Reallotment Report filed during our audit period, we noted that line 1.3 for the regular block grant carryover amount was $530,288, which was less than the maximum allowed carryover amount of $2,771,886. As part of our testwork, we were unable to obtain documentation to support that the amount reported on the federal report was accurate. Based on discussions with the Department, they indicated that the amount reported represented the unobligated balance as of June 30, 2021 as the federal report is due by August 1, 2021. However, we further noted that the unobligated balance for the federal grant as filed on its annual SF-425 report as of September 30, 2021 which would incorporate an additional 3 months of obligations, reported an unobligated balance of $979,648, which is greater than what was reported on the LIHEAP Carryover and Reallotment Report. D. 1 of 3 SF-425 federal reports selected for testwork that the New Hampshire Department of Energy (the Department) did not use the correct indirect cost rate when compiling the report. Instead of using a rate of 30.40%, the Department used a rate of 30.45%, resulting in indirect costs being over reported on the report by approximately $13. Cause The cause of the condition found was primarily due to insufficient resources within the Department to ensure the federal reports were filed or filed timely as well as insufficient policies and procedures to ensure that the documentation to support the amount reported on the LIHEAP Carryover and Reallotment Report. Based on inquiry with management, the Department at the time of the filing of the SF-425 report, the cognizant agency had not approved its proposed indirect cost rate so an older rate was used. The report was not subsequently revised once the rate was approved in April of 2022. Effect The effect of the condition found is that the Department did not file the required FFATA reports and the annual LIHEAP Performance Data Form and the LIHEAP Carryover and Reallotment Report and SF-425 reports may not have been filed accurately. Questioned Costs None. Recommendation We recommend that the Department should review to ensure there is sufficient safeguards in place for professionals to perform when positions are vacant so that necessary processes are completed related to compliance with federal requirements, including federal reporting requirements related to the timely submission of the annual LIHEAP Performance Report and the submission of FFATA reports for first-tier subawards. In addition, we recommend that the Department implement written policies and procedures for the compilation of the annual LIHEAP Carryover and Reallotment report and ensure that the documentation to support the amounts reported is maintained to support that the report is complete and accurate. Finally we recommend that the Department review its policies and procedures to ensure that the appropriate indirect cost rate is used within the SF-425 reports. View of Responsible Officials The Department of Energy recognizes the FFATA reporting requirement was not met due to insufficient resources in FY22 while completing an agency merger. The Department is adjusting our internal procedures and processes where necessary to address any and all deficiencies in our reporting requirements and we are currently training new staff on reporting regulations and processes. The corrective action to ensure that the annual Performance Report is filed timely is recognized. This was due to a lack of staffing to complete the report in a timely manner. A new associate position is being created and staffed at the NH Department of Energy to prevent this situation going forward. For the Carryover and Reallotment report, Additional support staff in both the Fiscal and Program offices for LIHEAP are being recruited and trained. This will ensure that adequate policies and procedures can be developed and implemented. For the SF-425 report, the Department of Energy disagrees with this finding. The expense was calculated at the agency?s calculated and submitted Indirect Cost Rate Proposal (30.45%) to our cognizant agency the US DHHS on December 30, 2020. Our proposal was not reviewed/approved by US DHHS until May 02, 2022 at the rate of 30.40%. Energy calculates and expenses indirect cost on a quarterly basis. At the time that the rate was calculated (after 9/30/2021) for FFY22 Q1, no response was received from US DHHS as to our proposal, therefore, per the recommendation of the Admin Services ? Comptroller?s office, the proposed rate of 30.45% was used to calculate the Indirect Cost expense for FFY22 Q1. The over reported charge was not due to ?insufficient review controls?. I did provide in our backup materials in PBC#38 the late response from US DHHS acknowledging the 30.4% rate to be approved and that acknowledgment is dated April 5, 2022 ? well beyond the time the expense was calculated for FFY22 Q1 expenses. Energy will continue to follow our established processes and procedures to ensure accurate federal grant expensing. Anticipated Completion Date: June 30, 2023 and September 30, 2023 for the Carryover and Reallotment Report Contact Person: Jane Lemire, Business Administrator (PT) and Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-027 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Cash Management Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria U.S. Department of the Treasury (Treasury) regulations at 31 CFR section 204 part 205 implement the Cash Management Act of 1990 (CMIA). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Catalog of Federal Domestic assistance that meet the funding threshold for a major federal program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1)). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over performed over cash management related to the Low-Income Home Energy Assistance program, we noted the following: A. Under the State of New Hampshire?s Cash Management Agreement (CMIA), direct expenditures are to be drawn using the actual draw ? monthly technique. Under this technique, the funds are to be requested monthly based on actual costs incurred during that 1-month period. The funding technique is interest neutral. During our testwork over the cash draw process, we noted the following: a. For 5 of 7 cash draws selected for testwork, the New Hampshire Department of Energy (the Department) did not draw funds timely resulting in the cash draw to be delinquent. Each of the 4 cash draw covered multiple months of activity. b. For 1 of 7 cash draws selected for testwork, the Department drew funds down in advance as the cash draw covered 27 days only for the month of March 2022. We further noted, that during the month of March 2022, the Department completed an additional cash draw that covered 3 days of activity. As the clearance pattern within the CMIA agreement is interest neutral, there was no interest impact because of the cash draws not being performed timely. B. The Department advances payments to subrecipients to ensure that they have sufficient cash on hand to pay for benefit payments. The Department passed through $37,990,873 to subrecipients during the year ended June 30, 2022. During our testwork over compliance with cash management, we noted that for 1 of 3 subrecipients selected for testwork, the Department provided an advance payment to the subrecipient for programmatic expense and the advanced funds were not fully used by the subrecipient for approximately 5 months. The Department?s normal disbursement cycle of every 30 days. As such, it does not appear that the Department sufficiently minimized the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes. In addition to the above, we noted that for the same subrecipient, the advance memo to authorize the advance payment was not signed by the Program and Fiscal Manager as required by the Department?s policies and procedures. Cause The cause of the condition found was primarily due to insufficient resources to monitor and track cash draws to ensure they are performed timely in accordance with the clearance patten established within the CMIA agreement and to ensure that subrecipients either utilize advance funds timely or effectively evaluate the amount of funds they need on hand at the time of the advance payment. Effect The effect of the condition found is that the Department did not comply with the provisions of the CMIA as it relates to the timing of cash draws. In addition, subrecipients had excess cash on hand as the Department did not minimize the time elapsing between the transfer of federal funds to the subrecipient and their disbursement of funds for program purposes. As such the Department was not in compliance with 2 CFR section 200.305(b)(1). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that all cash draws are performed timely and in accordance with the CMIA agreement. In addition, we recommend that the Department review its existing internal controls, policies and procedures relating to advancing funds to subrecipients to ensure that excess cash held by the subrecipients does not exceed 30 days. View of Responsible Officials Related to compliance with the CMIA, the Department of Energy acknowledges there were several instances where draws were not completed on a monthly basis for the prior month?s expenditures following the CMIA agreement in FY22. The Department of Energy has hired another staff person to complete business office grant-related tasks and will be reviewing and adjusting our policies and procedures if and where needed in the future. This staff person is still in training, therefore the completion date is not known at this time. Related to the timing of payments to subrecipients, due to staffing issues in both the Administrative and Fiscal offices, this recommendation is acknowledged and accepted. Support staff in both offices are being recruited and trained. This will ensure that adequate supervision and compliance of sub-recipient cash advances procedures are followed. Anticipated Completion Date: Ongoing Contact Person: Jane Lemire Business Administrator IV (PT) and Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-028 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2101NHLIE4 Federal Award Year: 2021 U.S. Department of Health and Human Services Compliance Requirement: Earmarking Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria No more than 10% of a state?s LIHEAP funds for a federal fiscal year may be used for planning and administrative costs, including both direct and indirect costs. This limitation applies, in the aggregate, to planning and administrative costs at both the state and subrecipient levels. This cap may not be exceeded by supplementing with other federal funds (42 USC 8624(b)(9)(A); 45 CFR section 96.88(a)). No more than 15 percent of the greater of the funds allotted or the funds available to the grantee for a federal fiscal year may be used for low-cost residential weatherization or other energy-related home repairs. The secretary may grant a waiver beginning April 1st, and the grantee may then spend up to 25 percent for residential weatherization or energy-related home repairs (42 USC 8624(k)). No more than 5 percent of the LIHEAP funds may be used to provide services that encourage and enable households to reduce their home energy needs and, thereby, the need for energy assistance. Such services may include needs assessments, counseling, and assistance with energy vendors (42 USC 8624(b)(16)). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition To ensure that the Department had met the required earmarking requirements related to administrative, weatherization and energy reduction service limitations, the New Hampshire Department of Energy (the Department) maintains a tracking sheet for each federal grant that tracks all expenditures by category. At the end of the grant period, the total expenditures are reconciled to the federal grant and costs incurred related to the earmarking requirements are calculated to ensure that the required limitations are not exceeded. During our testwork over earmarking, we noted that for 1 of 2 grants selected for testwork, the grant appeared to have meet the required earmarking requirements, however we were unable to test the completeness and accuracy of the underlying support. Further we were unable to reconcile the total expenditures contained within the underlying support to the final grant close out report (the SF-425) submitted for the grant. Cause The cause of the condition found is due to the Department is unable to submit a final close out report within the federal reporting portal as the portal does not contain an option to complete the required report. As a result, the last federal report filed for this grant was as of September 31, 2021, which was prior to the liquidation of all obligations under the grant. Effect The effect of the condition found is that the expenditures utilized to track compliance with the earmarking requirement may not reconcile to the final expenditures reported within the SF-425 resulting in noncompliance. Questioned Costs Not determinable. Recommendation We recommend that the Department continue to work with the federal government to ensure that all grants that are required to be closed out have a final SF-245 and that the final expenditures reported reconciles to the expenditures used to track the required earmarking requirements. View of Responsible Officials The Department of Energy is currently in contact and working with representatives from the US DHHS to resolve the fact that the SF-425 report is not available for updating at this time for grant #2001NHE5C3. It must be made available for updating within the HHS reporting site by DHHS in order for Grantees to edit and submit a report. Corrective Action We will continue to work with US DHHS for any grant awarded to us that has this same reporting issue in the future. Anticipated Completion Date: Ongoing Contact Person: Jane Lemire Business Administrator IV (PT)
Finding Reference Number: 2022-029 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Provider Eligibility (Screening and Enrollment) Type of Finding: Significant Deficiency Prior Year Finding: 2021-034 Statistically Valid Sample: No Criteria In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR sections 431.107 and 447.10; and Section 1902(a)(9) of the Social Security Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The Department assigns risks to each provider based on their provider type. All new provider enrollments and moderate and high-risk revalidations are reviewed and approved by the Department of Health and Human Services (the Department). However, for limited risk revalidations, the Department has outsourced this service to the Department?s Medicaid Management Information System fiscal agent (Fiscal Agent). The Department holds at least bi-weekly meetings with the fiscal agent to discuss issues noted with enrollment, revalidation, trends noted, etc. In addition, the Department has hired the Fiscal Agent to perform a quality assurance review over all new provider and revalidations prior to the notification that they are an eligible provider for State of New Hampshire services to address the accuracy of enrollment. The Department does not currently have a completeness process to ensure the Fiscal Agent reviews all providers for revalidations timely. Specifically, during our testwork over provider eligibility, we noted: 1. For 5 of 65 providers, there was greater than five years, from five to sixteen years, between the Department revalidating the providers eligibility. These providers were due for revalidation prior to the start of the COVID-19 pandemic. All five providers were determined to be eligible upon review of these long outstanding providers. 2. For 1 of 65 providers, the identified providers were enrolled via roster and the Department maintained an attestation that is uploaded with the enrollment with the provider facility. We viewed the attestation from the provider facility, and noted it was uploaded to the MMIS during the audit period but signed in 2012. The agreement should be more current than 2012. We noted the Department did obtain an updated agreement in August of 2022. Cause The Department has internal controls to address accuracy but not completeness which would identify providers that are due revalidation. Effect The effect of the condition found is that the Department does not revalidate providers timely and obtaining all relevant supporting documentation which could lead to ineligible providers billing for Medicaid services. Questioned Costs None. Recommendation We recommend the Department implement monitoring and communication internal controls to continually assess the need for provider revalidation to ensure that it is executed timely and in accordance with the requirements, including a plan to ensure all reviews are performed timely and include obtaining all relevant information. View of Responsible Officials 1. We concur. The Provider enrollment unit (PEU) is currently working on revalidations not completed and have a plan to deposition those providers while ensuring minimal disruption to member services and protecting limited provider networks disciplines such as the mental health network. I, the PEU administrator have been conducting biweekly meetings with Conduent and our business systems analyst to develop a plan and a systematic approach to revalidate all providers in the future. I am currently drafting a policy and procedure memo that will outline the new process for revalidations so that revalidations will be timely and complete in the future. Once the new process is implemented, I intend to review revalidations with Conduent at our biweekly provider enrollment meetings to ensure the revalidation process is conducted in a timely fashion and the implemented process for revalidations is working in that all revalidations are performed timely. As for the past due revalidations, the PEU anticipates all past due provider revalidations, prior to the PHE, to be either completed or be terminated by the beginning of March 2023. 2. We partially agree. The attestation signed in 2012 does not have an expiration and there is no Federal regulation or State law that requires this to be renewed, however, based on the finding last year, the Office of Medicaid Services did a new attestation in 2022. The 2022 attestation also does not have an end date and is not required to be renewed at any time. The attestation ends when the agreement is terminated by either parties. Anticipated Completion Date: March 2023 Contact Person: Stephanie Aulis
Finding Reference Number: 2022-030 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Medicaid National Correct Coding Initiative Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-035 Statistically Valid Sample: No Criteria In accordance with Section 1903(r) of the Social Security Act, effective October 1, 2010, SMAs were required to incorporate NCCI methodologies into the state Medicaid programs pursuant to the requirements of Section 6507 of the Affordable Care Act. In paying applicable Medicaid claims, states? MES are required to completely and correctly implement the following six Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed. a. NCCI Procedure-to-Procedure (PTP) edits for practitioner and ambulatory surgical center (ASC) claims. b. NCCI PTP edits for outpatient hospital services, including emergency department, observation care, and outpatient hospital laboratory services. c. Medically Unlikely Edit (MUE) units of service (UOS) edits for practitioner and ASC services. d. MUE UOS edits for outpatient hospital services including emergency department, observation care, and outpatient hospital laboratory services. e. MUE UOS edits for durable medical equipment (DME) billed by providers. f. NCCI PTP edits for durable medical equipment (added in October 2012). States are also required to use: ? all four components of each Medicaid NCCI methodology; ? the most recent quarterly Medicaid NCCI edit files for states; ? the Medicaid NCCI edits in effect for the date of service on the claim line or claim; ? the claim-adjudication rules in the Medicaid NCCI methodologies; and ? all modifiers for Healthcare Common Procedure Coding System (HCPCS) codes and Current Procedural Terminology (CPT) codes needed for the correct adjudication of applicable Medicaid claims. The NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual contain additional requirements for implementation of the NCCI methodologies. The Medicaid NCCI methodologies must be applied to Medicaid fee-for-service claims submitted with, and reimbursed on the basis of, HCPCS codes and CPT codes. This includes claims reimbursed on a fee-for-service basis in state Medicaid Primary Care Case Management managed care programs. Application of NCCI methodologies to fee-for-service claims processed by other entities, including limited benefit plans or Managed Care Organizations, is not required; however, if SMAs require the application of NCCI methodologies to fee-for-service claims processed by such entities, then such entities must meet NCCI program requirements, including compliance with the NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition Per the Department of Health and Human Services (the Department), the edits required by the above CMS criteria reside in the Medicaid Management Information System (MMIS) and are activated based on responses sent back to MMIS from Cotiviti, a third-party vendor. MMIS is managed by Conduent. Conduent has a SOC1 report prepared to report on the fairness of the presentation of management?s description of the service organization?s system and the suitability of the design of the controls to achieve the related control objectives included in the description as of a specified date. The Conduent SOC1 report for the period July 1, 2021, to June 30, 2022, provided a brief description in the report of the NCCI process with Cotiviti and the related NCCI edits within MMIS, and management indicated that the NCCI edits were included in the control objective testing within the SOC report. However, the NCCI edits were not included in the Change Management population testing and as such, we were unable to rely on the NCCI edits. Based on this, there was no ability for us to validate in accordance with the criteria noted above the NCCI process as the control environment and control objectives were not identified in the SOC report and were not included within all relevant GITC populations. Cause The cause of the condition found was primarily due to the Departments on-going efforts with Conduent and their SOC auditor to ensure the documentation needed to support the testing of the automatic MMIS NCCI edits are contained and clearly documented within the SOC1 report and ensuring the edits were appropriately included in all testing. Effect The six required Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed may not be completely and correctly implemented by the Department?s third-party service organization. Questioned Costs Not determinable. Recommendation We recommend the Department works with the service organization to identify the automated NCCI edit checks and supporting general IT controls to be covered within the SOC 1 report so that it meets federal guidelines for compliance. View of Responsible Officials We concur and have developed a corrective action plan in conjunction with Conduent. See attached plan. The SOC report will include auditing the change management of the quarterly NCCI edit checks. The auditing firm will also update the control objective 5 activities to include a population of claims specifically with NCCI edits. Anticipated Completion Date: The completed 6/30/2023 SOC report. Contact Person: Roger Boissonneau, MMIS Director
Finding Reference Number: 2022-031 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Managed Care Financial Audit Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria Effective no later than for rating periods for contracts starting on or after July 1, 2017, the state must periodically, but no less frequently than once every three years, conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of each MCO, PIHP, and PAHP and post the results of these audits on its website (42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2021, we noted the Department of Health and Human Services (the Department) was in the request for proposal (RFP) process for a vendor to perform the required periodic audits, for the year-ended June 30, 2020, which is within the 3-year cycle, which was to be completed during the year ended June 30, 2021. However, during our year ended June 30, 2022, federal single audit we noted the RFP process was not completed and the required periodic audit had not been conducted. Cause The Department was unable to complete the process to engage a vendor to ensure periodic audits were performed and posted on the State's website. Effect The Department is not in compliance with the requirements of 42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920. Questioned Costs None. Recommendation We recommend the Department complete the RFP process to select a vendor to perform the required periodic audits for the period ended June 30, 2020, and going forward as required by the regulations. View of Responsible Officials We concur. The Department has contracted with Myers & Stauffer (M&S) to conduct the periodic audits of all three of its Managed Care plans for State Plan Rate Year 2020. We anticipate the audits will be completed by August 2023. Anticipated Completion Date: September 2023 Contact Person: Shirley Iacopino
Finding Reference Number: 2022-029 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Provider Eligibility (Screening and Enrollment) Type of Finding: Significant Deficiency Prior Year Finding: 2021-034 Statistically Valid Sample: No Criteria In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR sections 431.107 and 447.10; and Section 1902(a)(9) of the Social Security Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The Department assigns risks to each provider based on their provider type. All new provider enrollments and moderate and high-risk revalidations are reviewed and approved by the Department of Health and Human Services (the Department). However, for limited risk revalidations, the Department has outsourced this service to the Department?s Medicaid Management Information System fiscal agent (Fiscal Agent). The Department holds at least bi-weekly meetings with the fiscal agent to discuss issues noted with enrollment, revalidation, trends noted, etc. In addition, the Department has hired the Fiscal Agent to perform a quality assurance review over all new provider and revalidations prior to the notification that they are an eligible provider for State of New Hampshire services to address the accuracy of enrollment. The Department does not currently have a completeness process to ensure the Fiscal Agent reviews all providers for revalidations timely. Specifically, during our testwork over provider eligibility, we noted: 1. For 5 of 65 providers, there was greater than five years, from five to sixteen years, between the Department revalidating the providers eligibility. These providers were due for revalidation prior to the start of the COVID-19 pandemic. All five providers were determined to be eligible upon review of these long outstanding providers. 2. For 1 of 65 providers, the identified providers were enrolled via roster and the Department maintained an attestation that is uploaded with the enrollment with the provider facility. We viewed the attestation from the provider facility, and noted it was uploaded to the MMIS during the audit period but signed in 2012. The agreement should be more current than 2012. We noted the Department did obtain an updated agreement in August of 2022. Cause The Department has internal controls to address accuracy but not completeness which would identify providers that are due revalidation. Effect The effect of the condition found is that the Department does not revalidate providers timely and obtaining all relevant supporting documentation which could lead to ineligible providers billing for Medicaid services. Questioned Costs None. Recommendation We recommend the Department implement monitoring and communication internal controls to continually assess the need for provider revalidation to ensure that it is executed timely and in accordance with the requirements, including a plan to ensure all reviews are performed timely and include obtaining all relevant information. View of Responsible Officials 1. We concur. The Provider enrollment unit (PEU) is currently working on revalidations not completed and have a plan to deposition those providers while ensuring minimal disruption to member services and protecting limited provider networks disciplines such as the mental health network. I, the PEU administrator have been conducting biweekly meetings with Conduent and our business systems analyst to develop a plan and a systematic approach to revalidate all providers in the future. I am currently drafting a policy and procedure memo that will outline the new process for revalidations so that revalidations will be timely and complete in the future. Once the new process is implemented, I intend to review revalidations with Conduent at our biweekly provider enrollment meetings to ensure the revalidation process is conducted in a timely fashion and the implemented process for revalidations is working in that all revalidations are performed timely. As for the past due revalidations, the PEU anticipates all past due provider revalidations, prior to the PHE, to be either completed or be terminated by the beginning of March 2023. 2. We partially agree. The attestation signed in 2012 does not have an expiration and there is no Federal regulation or State law that requires this to be renewed, however, based on the finding last year, the Office of Medicaid Services did a new attestation in 2022. The 2022 attestation also does not have an end date and is not required to be renewed at any time. The attestation ends when the agreement is terminated by either parties. Anticipated Completion Date: March 2023 Contact Person: Stephanie Aulis
Finding Reference Number: 2022-030 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Medicaid National Correct Coding Initiative Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-035 Statistically Valid Sample: No Criteria In accordance with Section 1903(r) of the Social Security Act, effective October 1, 2010, SMAs were required to incorporate NCCI methodologies into the state Medicaid programs pursuant to the requirements of Section 6507 of the Affordable Care Act. In paying applicable Medicaid claims, states? MES are required to completely and correctly implement the following six Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed. a. NCCI Procedure-to-Procedure (PTP) edits for practitioner and ambulatory surgical center (ASC) claims. b. NCCI PTP edits for outpatient hospital services, including emergency department, observation care, and outpatient hospital laboratory services. c. Medically Unlikely Edit (MUE) units of service (UOS) edits for practitioner and ASC services. d. MUE UOS edits for outpatient hospital services including emergency department, observation care, and outpatient hospital laboratory services. e. MUE UOS edits for durable medical equipment (DME) billed by providers. f. NCCI PTP edits for durable medical equipment (added in October 2012). States are also required to use: ? all four components of each Medicaid NCCI methodology; ? the most recent quarterly Medicaid NCCI edit files for states; ? the Medicaid NCCI edits in effect for the date of service on the claim line or claim; ? the claim-adjudication rules in the Medicaid NCCI methodologies; and ? all modifiers for Healthcare Common Procedure Coding System (HCPCS) codes and Current Procedural Terminology (CPT) codes needed for the correct adjudication of applicable Medicaid claims. The NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual contain additional requirements for implementation of the NCCI methodologies. The Medicaid NCCI methodologies must be applied to Medicaid fee-for-service claims submitted with, and reimbursed on the basis of, HCPCS codes and CPT codes. This includes claims reimbursed on a fee-for-service basis in state Medicaid Primary Care Case Management managed care programs. Application of NCCI methodologies to fee-for-service claims processed by other entities, including limited benefit plans or Managed Care Organizations, is not required; however, if SMAs require the application of NCCI methodologies to fee-for-service claims processed by such entities, then such entities must meet NCCI program requirements, including compliance with the NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition Per the Department of Health and Human Services (the Department), the edits required by the above CMS criteria reside in the Medicaid Management Information System (MMIS) and are activated based on responses sent back to MMIS from Cotiviti, a third-party vendor. MMIS is managed by Conduent. Conduent has a SOC1 report prepared to report on the fairness of the presentation of management?s description of the service organization?s system and the suitability of the design of the controls to achieve the related control objectives included in the description as of a specified date. The Conduent SOC1 report for the period July 1, 2021, to June 30, 2022, provided a brief description in the report of the NCCI process with Cotiviti and the related NCCI edits within MMIS, and management indicated that the NCCI edits were included in the control objective testing within the SOC report. However, the NCCI edits were not included in the Change Management population testing and as such, we were unable to rely on the NCCI edits. Based on this, there was no ability for us to validate in accordance with the criteria noted above the NCCI process as the control environment and control objectives were not identified in the SOC report and were not included within all relevant GITC populations. Cause The cause of the condition found was primarily due to the Departments on-going efforts with Conduent and their SOC auditor to ensure the documentation needed to support the testing of the automatic MMIS NCCI edits are contained and clearly documented within the SOC1 report and ensuring the edits were appropriately included in all testing. Effect The six required Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed may not be completely and correctly implemented by the Department?s third-party service organization. Questioned Costs Not determinable. Recommendation We recommend the Department works with the service organization to identify the automated NCCI edit checks and supporting general IT controls to be covered within the SOC 1 report so that it meets federal guidelines for compliance. View of Responsible Officials We concur and have developed a corrective action plan in conjunction with Conduent. See attached plan. The SOC report will include auditing the change management of the quarterly NCCI edit checks. The auditing firm will also update the control objective 5 activities to include a population of claims specifically with NCCI edits. Anticipated Completion Date: The completed 6/30/2023 SOC report. Contact Person: Roger Boissonneau, MMIS Director
Finding Reference Number: 2022-031 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Managed Care Financial Audit Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria Effective no later than for rating periods for contracts starting on or after July 1, 2017, the state must periodically, but no less frequently than once every three years, conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of each MCO, PIHP, and PAHP and post the results of these audits on its website (42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2021, we noted the Department of Health and Human Services (the Department) was in the request for proposal (RFP) process for a vendor to perform the required periodic audits, for the year-ended June 30, 2020, which is within the 3-year cycle, which was to be completed during the year ended June 30, 2021. However, during our year ended June 30, 2022, federal single audit we noted the RFP process was not completed and the required periodic audit had not been conducted. Cause The Department was unable to complete the process to engage a vendor to ensure periodic audits were performed and posted on the State's website. Effect The Department is not in compliance with the requirements of 42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920. Questioned Costs None. Recommendation We recommend the Department complete the RFP process to select a vendor to perform the required periodic audits for the period ended June 30, 2020, and going forward as required by the regulations. View of Responsible Officials We concur. The Department has contracted with Myers & Stauffer (M&S) to conduct the periodic audits of all three of its Managed Care plans for State Plan Rate Year 2020. We anticipate the audits will be completed by August 2023. Anticipated Completion Date: September 2023 Contact Person: Shirley Iacopino
Finding Reference Number: 2022-029 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Provider Eligibility (Screening and Enrollment) Type of Finding: Significant Deficiency Prior Year Finding: 2021-034 Statistically Valid Sample: No Criteria In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR sections 431.107 and 447.10; and Section 1902(a)(9) of the Social Security Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The Department assigns risks to each provider based on their provider type. All new provider enrollments and moderate and high-risk revalidations are reviewed and approved by the Department of Health and Human Services (the Department). However, for limited risk revalidations, the Department has outsourced this service to the Department?s Medicaid Management Information System fiscal agent (Fiscal Agent). The Department holds at least bi-weekly meetings with the fiscal agent to discuss issues noted with enrollment, revalidation, trends noted, etc. In addition, the Department has hired the Fiscal Agent to perform a quality assurance review over all new provider and revalidations prior to the notification that they are an eligible provider for State of New Hampshire services to address the accuracy of enrollment. The Department does not currently have a completeness process to ensure the Fiscal Agent reviews all providers for revalidations timely. Specifically, during our testwork over provider eligibility, we noted: 1. For 5 of 65 providers, there was greater than five years, from five to sixteen years, between the Department revalidating the providers eligibility. These providers were due for revalidation prior to the start of the COVID-19 pandemic. All five providers were determined to be eligible upon review of these long outstanding providers. 2. For 1 of 65 providers, the identified providers were enrolled via roster and the Department maintained an attestation that is uploaded with the enrollment with the provider facility. We viewed the attestation from the provider facility, and noted it was uploaded to the MMIS during the audit period but signed in 2012. The agreement should be more current than 2012. We noted the Department did obtain an updated agreement in August of 2022. Cause The Department has internal controls to address accuracy but not completeness which would identify providers that are due revalidation. Effect The effect of the condition found is that the Department does not revalidate providers timely and obtaining all relevant supporting documentation which could lead to ineligible providers billing for Medicaid services. Questioned Costs None. Recommendation We recommend the Department implement monitoring and communication internal controls to continually assess the need for provider revalidation to ensure that it is executed timely and in accordance with the requirements, including a plan to ensure all reviews are performed timely and include obtaining all relevant information. View of Responsible Officials 1. We concur. The Provider enrollment unit (PEU) is currently working on revalidations not completed and have a plan to deposition those providers while ensuring minimal disruption to member services and protecting limited provider networks disciplines such as the mental health network. I, the PEU administrator have been conducting biweekly meetings with Conduent and our business systems analyst to develop a plan and a systematic approach to revalidate all providers in the future. I am currently drafting a policy and procedure memo that will outline the new process for revalidations so that revalidations will be timely and complete in the future. Once the new process is implemented, I intend to review revalidations with Conduent at our biweekly provider enrollment meetings to ensure the revalidation process is conducted in a timely fashion and the implemented process for revalidations is working in that all revalidations are performed timely. As for the past due revalidations, the PEU anticipates all past due provider revalidations, prior to the PHE, to be either completed or be terminated by the beginning of March 2023. 2. We partially agree. The attestation signed in 2012 does not have an expiration and there is no Federal regulation or State law that requires this to be renewed, however, based on the finding last year, the Office of Medicaid Services did a new attestation in 2022. The 2022 attestation also does not have an end date and is not required to be renewed at any time. The attestation ends when the agreement is terminated by either parties. Anticipated Completion Date: March 2023 Contact Person: Stephanie Aulis
Finding Reference Number: 2022-030 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Medicaid National Correct Coding Initiative Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-035 Statistically Valid Sample: No Criteria In accordance with Section 1903(r) of the Social Security Act, effective October 1, 2010, SMAs were required to incorporate NCCI methodologies into the state Medicaid programs pursuant to the requirements of Section 6507 of the Affordable Care Act. In paying applicable Medicaid claims, states? MES are required to completely and correctly implement the following six Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed. a. NCCI Procedure-to-Procedure (PTP) edits for practitioner and ambulatory surgical center (ASC) claims. b. NCCI PTP edits for outpatient hospital services, including emergency department, observation care, and outpatient hospital laboratory services. c. Medically Unlikely Edit (MUE) units of service (UOS) edits for practitioner and ASC services. d. MUE UOS edits for outpatient hospital services including emergency department, observation care, and outpatient hospital laboratory services. e. MUE UOS edits for durable medical equipment (DME) billed by providers. f. NCCI PTP edits for durable medical equipment (added in October 2012). States are also required to use: ? all four components of each Medicaid NCCI methodology; ? the most recent quarterly Medicaid NCCI edit files for states; ? the Medicaid NCCI edits in effect for the date of service on the claim line or claim; ? the claim-adjudication rules in the Medicaid NCCI methodologies; and ? all modifiers for Healthcare Common Procedure Coding System (HCPCS) codes and Current Procedural Terminology (CPT) codes needed for the correct adjudication of applicable Medicaid claims. The NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual contain additional requirements for implementation of the NCCI methodologies. The Medicaid NCCI methodologies must be applied to Medicaid fee-for-service claims submitted with, and reimbursed on the basis of, HCPCS codes and CPT codes. This includes claims reimbursed on a fee-for-service basis in state Medicaid Primary Care Case Management managed care programs. Application of NCCI methodologies to fee-for-service claims processed by other entities, including limited benefit plans or Managed Care Organizations, is not required; however, if SMAs require the application of NCCI methodologies to fee-for-service claims processed by such entities, then such entities must meet NCCI program requirements, including compliance with the NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition Per the Department of Health and Human Services (the Department), the edits required by the above CMS criteria reside in the Medicaid Management Information System (MMIS) and are activated based on responses sent back to MMIS from Cotiviti, a third-party vendor. MMIS is managed by Conduent. Conduent has a SOC1 report prepared to report on the fairness of the presentation of management?s description of the service organization?s system and the suitability of the design of the controls to achieve the related control objectives included in the description as of a specified date. The Conduent SOC1 report for the period July 1, 2021, to June 30, 2022, provided a brief description in the report of the NCCI process with Cotiviti and the related NCCI edits within MMIS, and management indicated that the NCCI edits were included in the control objective testing within the SOC report. However, the NCCI edits were not included in the Change Management population testing and as such, we were unable to rely on the NCCI edits. Based on this, there was no ability for us to validate in accordance with the criteria noted above the NCCI process as the control environment and control objectives were not identified in the SOC report and were not included within all relevant GITC populations. Cause The cause of the condition found was primarily due to the Departments on-going efforts with Conduent and their SOC auditor to ensure the documentation needed to support the testing of the automatic MMIS NCCI edits are contained and clearly documented within the SOC1 report and ensuring the edits were appropriately included in all testing. Effect The six required Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed may not be completely and correctly implemented by the Department?s third-party service organization. Questioned Costs Not determinable. Recommendation We recommend the Department works with the service organization to identify the automated NCCI edit checks and supporting general IT controls to be covered within the SOC 1 report so that it meets federal guidelines for compliance. View of Responsible Officials We concur and have developed a corrective action plan in conjunction with Conduent. See attached plan. The SOC report will include auditing the change management of the quarterly NCCI edit checks. The auditing firm will also update the control objective 5 activities to include a population of claims specifically with NCCI edits. Anticipated Completion Date: The completed 6/30/2023 SOC report. Contact Person: Roger Boissonneau, MMIS Director
Finding Reference Number: 2022-031 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Managed Care Financial Audit Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria Effective no later than for rating periods for contracts starting on or after July 1, 2017, the state must periodically, but no less frequently than once every three years, conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of each MCO, PIHP, and PAHP and post the results of these audits on its website (42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2021, we noted the Department of Health and Human Services (the Department) was in the request for proposal (RFP) process for a vendor to perform the required periodic audits, for the year-ended June 30, 2020, which is within the 3-year cycle, which was to be completed during the year ended June 30, 2021. However, during our year ended June 30, 2022, federal single audit we noted the RFP process was not completed and the required periodic audit had not been conducted. Cause The Department was unable to complete the process to engage a vendor to ensure periodic audits were performed and posted on the State's website. Effect The Department is not in compliance with the requirements of 42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920. Questioned Costs None. Recommendation We recommend the Department complete the RFP process to select a vendor to perform the required periodic audits for the period ended June 30, 2020, and going forward as required by the regulations. View of Responsible Officials We concur. The Department has contracted with Myers & Stauffer (M&S) to conduct the periodic audits of all three of its Managed Care plans for State Plan Rate Year 2020. We anticipate the audits will be completed by August 2023. Anticipated Completion Date: September 2023 Contact Person: Shirley Iacopino
Finding Reference Number: 2022-032 NH Department of Safety Disaster Grants ? Public Assistance (Presidentially Declared Disasters) and COVID-19 Public Assistance (Presidentially Declared Disasters) (Assistance Listing #97.036) Federal Award Numbers: FEMA-4622-DR-NH, FEMA-4457-DR-NH, FEMA-4370-DR, FEMA-4371-DR, FEMA-4335-DR, FEMA-4329-DR, FEMA-4516-DR-NH Federal Award Year: October 16, 2021, July 11-12, 2019, March 2-8, 2018, March 13-12, 2018, January 2, 2018, October 29-November 1, 2017, July 1-2, 2017, January 20, 2020 U.S. Department of Homeland Security Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria The SF-425, Federal Financial Report, is required to be filed annually. Quarterly progress reports are due from recipients on all open large projects 30 days after the end of each calendar quarter. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over federal reporting as part of the reporting, we noted the following: A. We noted for 1 out of 5 SF425's tested the total federal funds authorized (d) per the SF 425 report did not agree to the SAG Smartlink Report. The SF 425 box (d) reported $9,556,675, while Smartlink reported $9,503,026. Per inquiry with the New Hampshire Department of Safety (the Department), there were some projects that were de-obligated during the quarter. The Department did not update this amount on the SF 425, as the line should have read $9,503,025. The amount reported was the balance from the prior quarter. Subsequent to our identification of the error, the Department has revised the report and resubmitted the corrected version B. We noted for 1 of 16 Quarterly Progress Reports (QPR) selected for testwork the subrecipient was listed within the QPR report population provided by Department indicating they were required to file the QPR report. However, no such report was required to be filed and as such we were unable to validate the completeness of the QPR report population to ensure that all required QPR reports were properly filed. C. We noted for 5 of the remaining 15 QPR reports selected for testwork that the Department did not provide sufficient documentation to either support the accuracy of the amounts reported or the support documentation provided did not agree to the amount reported within the QPR. As such we are unable to substantiate the accuracy of the amounts reported to FEMA on the QPR reports. Cause The cause of the condition found was primarily due to insufficient internal controls related to reporting. Specifically, the internal controls in place did not operate at a precision level to detect a overstatement in amounts reported on the SF-425 report. Additionally, management does not have sufficient internal controls in place to track QPR reports and retain appropriate supporting documentation to substantiate amounts reported. Effect The effect of the condition found is that the Department did not file SF-425 reports and QPR reports accurately. Questioned Costs None. Recommendation We recommend that the Department ensure the operating effectiveness of its internal controls over financial and performance reporting are at a precision level sufficient enough to ensure the accuracy of its federal reporting. View of Responsible Officials Corrective actions are currently in development to address the completeness and accuracy of HSEM?s federal reporting. Anticipated Completion Date: June 30, 2023 Contact Person: Matthew Hotchkiss, Financial Manager HSEM, 603-223-3624, Matthew.A.Hotchkiss@dos.nh.gov
Finding Reference Number: 2022-032 NH Department of Safety Disaster Grants ? Public Assistance (Presidentially Declared Disasters) and COVID-19 Public Assistance (Presidentially Declared Disasters) (Assistance Listing #97.036) Federal Award Numbers: FEMA-4622-DR-NH, FEMA-4457-DR-NH, FEMA-4370-DR, FEMA-4371-DR, FEMA-4335-DR, FEMA-4329-DR, FEMA-4516-DR-NH Federal Award Year: October 16, 2021, July 11-12, 2019, March 2-8, 2018, March 13-12, 2018, January 2, 2018, October 29-November 1, 2017, July 1-2, 2017, January 20, 2020 U.S. Department of Homeland Security Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria The SF-425, Federal Financial Report, is required to be filed annually. Quarterly progress reports are due from recipients on all open large projects 30 days after the end of each calendar quarter. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over federal reporting as part of the reporting, we noted the following: A. We noted for 1 out of 5 SF425's tested the total federal funds authorized (d) per the SF 425 report did not agree to the SAG Smartlink Report. The SF 425 box (d) reported $9,556,675, while Smartlink reported $9,503,026. Per inquiry with the New Hampshire Department of Safety (the Department), there were some projects that were de-obligated during the quarter. The Department did not update this amount on the SF 425, as the line should have read $9,503,025. The amount reported was the balance from the prior quarter. Subsequent to our identification of the error, the Department has revised the report and resubmitted the corrected version B. We noted for 1 of 16 Quarterly Progress Reports (QPR) selected for testwork the subrecipient was listed within the QPR report population provided by Department indicating they were required to file the QPR report. However, no such report was required to be filed and as such we were unable to validate the completeness of the QPR report population to ensure that all required QPR reports were properly filed. C. We noted for 5 of the remaining 15 QPR reports selected for testwork that the Department did not provide sufficient documentation to either support the accuracy of the amounts reported or the support documentation provided did not agree to the amount reported within the QPR. As such we are unable to substantiate the accuracy of the amounts reported to FEMA on the QPR reports. Cause The cause of the condition found was primarily due to insufficient internal controls related to reporting. Specifically, the internal controls in place did not operate at a precision level to detect a overstatement in amounts reported on the SF-425 report. Additionally, management does not have sufficient internal controls in place to track QPR reports and retain appropriate supporting documentation to substantiate amounts reported. Effect The effect of the condition found is that the Department did not file SF-425 reports and QPR reports accurately. Questioned Costs None. Recommendation We recommend that the Department ensure the operating effectiveness of its internal controls over financial and performance reporting are at a precision level sufficient enough to ensure the accuracy of its federal reporting. View of Responsible Officials Corrective actions are currently in development to address the completeness and accuracy of HSEM?s federal reporting. Anticipated Completion Date: June 30, 2023 Contact Person: Matthew Hotchkiss, Financial Manager HSEM, 603-223-3624, Matthew.A.Hotchkiss@dos.nh.gov
Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-003 NH Department of Health and Human Services SNAP Cluster and COVID-19 SNAP (Assistance Listing #10.551 and #10.561) Federal Award Numbers 202020S51444, 204NH403S514, 214NH403S2514, 214NH403S2519 Federal Award Year: 2020, 2021 U.S. Department of Agriculture Compliance Requirement: Special Tests and Provisions: EBT Card Security Type of Finding: Significant Deficiency and Material Noncompliance Prior Year Finding: 2021-004 Statistically Valid Sample: No Criteria The state is required to maintain adequate security over, and documentation/records for, EBT cards, to prevent their theft, embezzlement, loss, damage, destruction, unauthorized transfer, negotiation, or use (7 CFR section 274.8(b)(3)). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The New Hampshire Department of Health and Human Services (the Department) contracts with a third party to process all daily EBT transactions associated with the SNAP program. The Department transmits data to the third-party service provider that contains information concerning participants that need a new EBT card issued. The third-party service provider generates the EBT cards based on this request and express mails the EBT cards to the Department. The Department reviews the listing of EBT cards that were delivered to ensure that there are no missing EBT cards and then subsequently mails the EBT cards to the individual participant. During our testwork over the daily reconciliation performed over the EBT cards issued, we were unable to obtain documented evidence that the Department had performed daily reconciliations to ensure that only authorized EBT cards that were issued prior to May 5, 2022. As such, we were unable to test compliance with this requirement for the period of July 1, 2021 to May 5, 2022. Cause The cause of the condition found is that the Department only maintained the support for the daily reconciliation process for a 6-month period. After 6 months, the daily reconciliation was destroyed. The Department implemented a corrective action plan that went into effect on May 5, 2022 to address the condition found. As a result, for all 15 sample items selected that were after May 5, 2022, all sample items were found to be properly supported and no instances of noncompliance were identified. Effect The effect of the condition found is that prior to May 5, 2022, EBT cards could have been generated that were not authorized and the Department may not have been able to identify the error timely. Questioned Costs None. Recommendation We recommend that the Department continue to implement its corrective action plan to ensure that daily EBT reconciliations are appropriately maintained. View of Responsible Officials We concur. The Department has been saving and scanning the inventory sheets that are accompanied with the daily EBT card delivery since May 2022. We believe this current control in place allows us to remain in compliance with all requirements. We currently save the inventory sheets in a folder with the daily date as the title and save them in the correct monthly folder. Those monthly folders will then be kept in a yearly folder. Anticipated Completion Date 02/23/2023 Contact Person Frank Beck, EBT Administrator
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-004 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Coronavirus Relief Fund (Assistance Listing #21.019) Federal Award Numbers: Not Applicable Federal Award Year: 2020 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency Prior Year Finding: 2021-011 Statistically Valid Sample: No Criteria A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.331(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.331(b)); and 3. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, 2 CFR section 200.303(a) states that non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition Under the Coronavirus Relief Fund Program (CRF), the State of New Hampshire (the State) entered into various grant agreements with a third parties to provide program services under the CRF program. As part of our testwork over the subrecipient monitoring process, we noted the following breakdown of internal controls: A. The State communicates award information to the subrecipient through the approved grant agreement. During our testwork over the communication of award information, we noted instances where the State did not communicate all the required award information as outlined in 2 CFR section 200.331. Specifically, we noted the following: a. The indirect cost rate for the federal award, including if the de minimis rate is charged, was not included in each of the 7 grant agreements selected for testwork. b. Identification of whether the award is R&D was not included in 2 of 7 grant agreements selected for testwork. B. For 5 of 7 subrecipients selected for testwork, there was no evidence provided that a risk assessment had been performed for the subrecipient. While a risk assessment was not performed, we noted that for all 7 subrecipients selected for testwork that the State performed during the award monitoring procedures. C. The State did not appear to have policies and procedures over internal controls in place to determine if a subrecipient had a Uniform Guidance report if the amount awarded to the subrecipient under the CRF program was under the audit threshold of $750,000. Based on our independent review of uniform guidance submissions within the Federal Audit Clearinghouse, none of the 7 subrecipients selected for testwork had a submitted uniform guidance report, and as such, a management decision letter would not have been required to be submitted for the each of the 7 subrecipients. Cause The cause of the condition found is due to insufficient policies and internal controls to ensure that grant agreements contain the appropriate award notification information, that documented risk assessments are performed and that a comprehensive review to determine if subrecipients had a uniform guidance submitted regardless of the amount awarded under this federal award. Effect The effect of the condition found is that the State did not have sufficient internal controls in place in accordance with 2 CFR section 200.303(a)) and 200.332.(a). In addition, subrecipients could have had a uniform guidance report issued in which a management decision letter needed to be issued but as the Department does not evaluate this for subrecipient?s that were not granted more than $750,000, they would not be able to recognize the need for a management decision letter timely. Questioned Costs None. Recommendation We recommend that the State review its existing internal controls, policies, and procedures to ensure that the State complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b), and 2 CFR section 200.251. This would include ensuring that: 1. All required award information is communicated to subrecipients; 2. Documented risk assessments are performed over all subrecipients; and 3. All subrecipients are reviewed regardless of amount awarded to determine if a uniform guidance report was issued and if a management decision letter should be issued. View of Responsible Officials The State concurs in part with the findings and concurs in part with the recommendations. Given that CARES Act CRF is a funding source that is no longer eligible for use because program obligations were required to be entered into by December 31, 2021, and program expenditures complete by September 30, 2022, there are no ongoing CRF funded projects or programs. As a result, any corrective actions would relate to ensuring any other federal funding sources are achieving compliance requirements. With regard to condition A, the State partially concurs. Federal guidance concerning CARES Act CRF did not allow for charging indirect costs. That guidance indicated ?Payments from the Fund are not administered as part of a traditional grant program and the provisions of the Uniform Guidance, 2 CFR part 200, that are applicable to indirect costs do not apply. Recipients may not apply their indirect costs rates to payments received from the Fund.? Thus, awardees and recipients of funds were not permitted to charge indirect costs against CARES Act CRF. However, the state acknowledges inclusion of language specifically acknowledging the disallowance of indirect costs could have been included in the agreements. With regard to condition B, the State concurs. The four identified subrecipients were awardees of a program that was facilitated at the very end of CARES Act CRF eligibility for the period of performance. This program was run due to updated guidance by U.S. Treasury on December 14, 2021, that extended the deadline for expenditure of funds so long as obligations were entered into by December 31, 2021. That program largely resulted in direct beneficiary awards, but due to the nature of some expenditures awarded some entities received a subaward. Those subawards identified a brief timeline for project completion, between December 2021 and September 2022. Most projects were completed in February and March, with two of the subrecipients finalizing projects in September. Given the nature and timing of the program, those subawardees were closely monitored and regularly interacted with the State in order to receive reimbursement for eligible expenses and complete projects. The State can provide documentation of that monitoring and expense review. However, formal risk assessments were not initially done for those entities. Since then, the State has implemented policies and procedures that help ensure risk assessments are completed for all subrecipients, regardless of the nature of the program. With regard to condition C, the State concurs and has already implemented corrective actions to ensure procedures and policies are in place concerning Uniform Guidance Report review and the issuance of any necessary management decision letters to the extent required and where this deficiency could impact any other sources of federal funding. It is worth noting that the State in most cases has timely conducted risk assessments of subrecipients and reviewed relevant Uniform Guidance Reports, but its corrective action will result in better documentation of that process and protocol. Anticipated Completion Date: The corrective actions indicated above have already been implemented as of the date of this response. Contact Person: Steve Giovinelli and Chase Hagaman
Finding Reference Number: 2022-005 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Emergency Rental Assistance Program (Assistance Listing #21.023) Federal Award Numbers ERA0012-ERA0435, ERAE0119 Federal Award Year: 2020 U.S. Department of Treasury Compliance Requirement: Reporting and Special Tests and Provisions ? ERA 1 Funds Redirection Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria The financial information certified as part of reallocation includes monthly expenditure and cumulative obligations levels, as described in the Treasury reallocation guidance. ERA 1 expenditures reported monthly by the grantee are inputs to Treasury?s reallocation expenditure ratio. ERA1 obligations certified in the Request for Reallocated Funds form (1505-0266), including in the Request for Voluntarily Reallocated Funds, are inputs into determining eligibility to receive reallocated funds. ERA 2 expenditures and obligations reported in quarterly reports by the grantee are inputs to Treasury?s ERA 2 reallocation expenditure and obligation ratios. The reallocation expenditure ratio determines whether the grantee is subject to involuntary reallocation due to an insufficient ratio and the amount of excess funds subject to recapture by Treasury. Auditors should confirm the amounts reported as expended and obligated accurately capture the grantee?s housing activity at the time of submission, as reflected in a grantee?s award and/or financial systems, and that grantees receiving reallocated funds met the Treasury criteria. All ERA grantees must submit quarterly reports with reporting periods of one calendar quarter and several cumulative fields covering all activity from the date of award through the quarter close. These reports provide financial and performance data regarding grantee administration of their ERA projects and capture program design in addition to program status data elements. Quarterly reports are intended to capture standard financial and performance data, as well as detailed information on qualifying direct and indirect expenditures pursuant to the government-wide Federal Funding Accountability and Transparency Act (FFATA) reporting requirements and in accordance with Section 15011 of the CARES Act, as amended and interpreted in Treasury?s reporting and compliance guidance on Treasury.gov. 2 CFR section 334 required financial records, statistical records and all other non-federal entity records pertinent to a federal award to be retained for a period of 3 years from the date of submission of the final expenditure report. The two Monthly Reporting questions are included in the information collection for the Interim Quarterly Reports. Beginning with the monthly report for the April 1 through April 30, 2021, period of performance for ERA 1 generally due to Treasury by May 15, 2021, state, local and territorial grantees receiving ERA 1 awards submit monthly reports. For ERA 2, monthly reporting began with the June 1 through June 30, 2021 period of performance and reports were due to Treasury by July 15, 2021, or where otherwise extended in an approved authorization from EmergencyRentalAssistance@Treasury.gov. Grantees receiving ERA 1 and ERA 2 allocations later in the award cycle as evidenced by award or reallocation dates are not required to submit reports for periods not covered by the assistance agreement. Additionally, 2 CFR section 200.303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our testwork over reporting and special tests and provisions, we noted the following: A. On a quarterly basis the New Hampshire Governor?s Office of Emergency Relief and Recovery (the Office) submits the required 1505-0266 quarterly federal reporting through the U.S. Treasury (Treasury) reporting portal. During our testwork over the quarterly reporting process, for 2 of 4 quarterly reports selected for testwork, we were unable to review a copy of the report submitted or the related supporting documentation and evidence of review and approval of the reports. As a result, we were unable to verify if the federal reports were complete and accurately submitted and properly approved in accordance with management?s internal control policies. B. On a monthly basis, the Office submits required federal reports to Treasury that are used by Treasury as part of its reallocation process. To compile the federal report, the Office obtains from its subrecipient the number of participating households that receive ERA assistance of any kind and the total amount of ERA funds expended by the ERA grantee to or for participating households on behalf of eligible households. During our review over the compilation of the monthly report, we noted that the Office does not perform any documented review procedures over the data submitted by the subrecipient to ensure the data is complete and accurate before the reports are submitted. As a result, while the monthly reports agreed to the data provided by the subrecipient, we are not able to determine if the data provided by the subrecipient was complete and accurate. Cause The cause of the condition found related to the quarterly reports was due to the Office not having policies and procedures to ensure that a copy of the federal report submitted is maintained along with the documentation to support the amounts reported and evidence that the report was reviewed and approved prior to submission. The Office anticipated being able to access the information directly from the US Treasury reporting portal however, changes were subsequently made to the portal that no longer allows the Office to download and view the report and related report data for prior quarters. The US Treasury did make changes to its portal in late March of 2023 which allowed the Office to access its prior issued reports but there was insufficient time for the auditor to test the accuracy of these reports. The cause of the condition found related to the monthly reports was due to the Office does not having formal procedures to document at a precision level evidence of review of the data, including the key line items, provided by the subrecipient. Per inquiry of management, we noted that the Office meets weekly with the subrecipient and as part of these meetings, the related data used for reporting purposes is discussed. However, there is no evidence such as meeting minutes or agendas maintained to validate that this review occurred at an appropriate precision level. Effect The effect of the condition found is that the Office submit quarterly and monthly reports that are used in the reallocation process that may not be complete and accurate. Data included within the quarterly reports include cumulative amount obligated by the grantee and the cumulative amount expended by the grantee may not be complete and accurate. Data included within the monthly reports include key line items as the Treasury?s guidance to qualify for receiving a reallocation payment for ERA 1 and grantees are subject to returning funds under reallocation where their expenditure for ERA 1 is less than the requirement in effect at the time, as detailed in the Treasury?s reallocation guidance. Questioned Costs None. Recommendation We recommend that the Office develop and implement written policies and procedures over the federal reporting process that includes: 1. Instructions on how to maintain and store filed reports and supporting documentation so that it is retained for its records. In addition to the retention of the report, the Office should also maintain written documentation of its process over reviewing the report for completeness and accuracy prior to submission to the federal government. 2. Written policies and procedures over its review of data submitted by the subrecipient that is utilized as the basis of federal reports to ensure that the data utilized is complete and accurate. The Office should ensure that its policies and procedures include guidelines that describe how the review is to be performed and documented to provide evidence that the review of the data has been completed. View of Responsible Officials Quarterly Reporting The State concurs in part with the condition and recommendation. A unique challenge with ERA reporting has been changes in the U.S. Treasury portal for that program, which have impacted the State?s ability to download and provide copies of past reports that have been submitted. In addition, this issue in the reporting portal has been inconsistent, as some previously submitted reports were made accessible by Treasury, while others were not, which resulted in the State being able to access some requisite materials but not others. The State did not have documented procedures to ?pull down? copies of reports it had submitted to Treasury because the State has otherwise been able to rely on access to its previously submitted reports within reporting portals in order to enable the testing required during audit for the relevant periods. Meaning, in the State?s experience with COVID-19 related federal funds reporting, it has been able to access and download past reports for purposes of audit. However, also noted above is that the Treasury portal was recently revised and updated to allow for accessing previously submitted ERA reports that were not otherwise available (the communication from Treasury acknowledging this change was provided by the State). However, the reporting portal change did not take place in time for the State?s auditors to reasonably conduct the necessary testing. The State did provide the data and materials it reported to Treasury for the relevant periods, but auditors were unable to test and validate that data because the State could not access and provide a copy of what was actually uploaded into the portal. Nevertheless, to avoid any such potential issues in the future, the State has already implemented a procedure that involves downloading copies of reports as soon as they are submitted and taking screenshots of portions of the portal where perceived necessary to support what the State has submitted to Treasury. This updated procedure will be memorialized in the program?s transaction processing memo during its next update. Monthly Reporting The State concurs in part but has already implemented related corrective action in line with the recommendation above. The State would also like to note that as part of the ERA reallocation process U.S. Treasury has relied on both quarterly and monthly reporting, and that the State has continued to engage in thorough monitoring of its subrecipient and receives regular reports from that subrecipient, including weekly, biweekly, and quarterly data, which also includes quality control reports. This is inclusive of the monthly reports that were required by U.S. Treasury at one time but no longer are. The State reviews and then discusses reports received at standing, calendared, weekly meetings with the subrecipient and often engages in e-mail correspondence concerning those reports, especially if any questions concerning the data provided arise. However, the State has acknowledged that its documentation of those weekly conversations needed to be more formally memorialized. During the current fiscal year, the State began providing agendas and summaries of topics discussed during the weekly check-ins and will ensure that the program?s transaction processing memo adequately documents this requirement and procedure. The very nature of this program and U.S. Treasury?s facilitation of it has required the State and its subrecipient to stay in close contact, make regular decisions on strategies and policies within the program, and closely consider data relative to it. Anticipated Completion Date Quarterly reporting - Corrective action relative to acquisition of submitted federal reports has already been implemented and this revised procedure will be memorialized in the transaction processing memo for the program during its next update in Q1 2023. Monthly Repotting - Corrective action relative to documentation of weekly meetings was already complete as of the State?s response to this finding, and the State will ensure that the transaction processing memo for the program reflects these measures during its next update in Q1 2023. Contact Person Chase Hagaman, Lisa Cota-Robles, and Emily Larson
Finding Reference Number: 2022-006 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Homeowners Assistance Fund Program (Assistance Listing #21.026) Federal Award Numbers: HAFP-0190 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Cash Management Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1)). Additionally, 2 CFR section 200.303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The State of New Hampshire Governor?s Office of Emergency Relief and Recovery (the Office) entered into a subrecipient grant agreement whereby the subrecipient is responsible for determining benefit eligibility as well as calculating the benefit amount that the participant is eligible to receive. During the year ended June 30, 2022, the Department passed through $49,250,000 to its subrecipient. Funds paid under this program were authorized to be paid in advance through a series of executive orders by the Governor?s Office to the subrecipient. While the Office properly advanced the funds, they did not monitor or assess at the time of payment what the subrecipient?s cash needs were to ensure that the Office sufficiently minimized the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes for each of the 2 transactions selected for testwork. Cause The cause of the condition found is that the Office was authorized through executive orders to issue the advance payments to the subrecipient. Given this authorization, the Office management do not consider minimizing the time elapsing between the transfer of federal funds to the subrecipient and their disbursement compliance. Per inquiry of management, we noted that the Office meets weekly with the subrecipient and as part of these meetings, cash on hand at the subrecipient level is discussed. However, there is no evidence such as meeting minutes or agendas maintained to validate that this review occurred at an appropriate precision level. Effect The effect of the condition found is that the subrecipient could have excess cash on hand as the Office did not minimize the time elapsing between the transfer of federal funds to the subrecipient and their disbursement of funds for program purposes. Questioned Costs None. Recommendation We recommend that the Office develop and implement written policies and procedures relating to advancing funds to subrecipients to ensure that excess cash on hand at the subrecipient does not exceed 30 days and that its review over excess cash on hand is properly documented to provide evidence that it has been reviewed. View of Responsible Officials The State concurs in part with the premise of the findings identified, but it does not concur with the characterization of the Governor?s Office for Emergency Relief and Recovery (GOFERR), the process for authorizing the relevant subaward and relevant amendments, the nature of the subaward and amendments, or the recommended corrective action. Moreover, the full $49,250,000 identified in the finding was not provided to the subrecipient in one lump sum. The State was allocated $50,000,000 from U.S. Treasury for the purposes of designing and facilitating the State?s HAF program. The State received $5,000,000 from U.S. Treasury up front and received the remainder after approval of the State?s planned program. As a result, the State?s subrecipient received an initial subaward for administrative and planning purposes from within the initial $5,000,000 delivered to the State. The subrecipient was advanced only a portion of those initial funds and then was provided the remainder upon request and justification. A subsequent amendment to that subaward provided additional funds to the subrecipient as needed for the same purpose and as part of the U.S. Treasury required process of designing and then attaining approval for the State?s HAF program. The State ultimately received approval from U.S. Treasury for the State?s HAF program plan, which is a complex multi-faceted program that provides various forms of assistance to homeowners, and then received approval from State officials to launch the program. The State?s program is run entirely through a single subrecipient, New Hampshire Housing Finance Authority, which is the only entity of its kind as a statewide housing authority. This subrecipient facilitates a variety of larger-scale, federally funded housing programs. While developing the State?s HAF program and as it neared the launch date, the State began receiving preapplications through its subrecipient. Additionally, during this time, the State was facilitating its Emergency Rental Assistance (ERA) program, which has provided assistance to renters as opposed to homeowners and is facilitated by the same subrecipient of the State. Within the context of having received nearly 200 preapplications for the HAF program and witnessing a heavy and increasing demand in the rental assistance program, the decision was made to advance the remainder of the State?s HAF allocation ($45,000,000) to its subrecipient in order to provide prompt and adequate assistance, believing the program would experience high demand at the outset and funding shortfalls would be problematic for its success. Moreover, the amount of funds provided to the subrecipient was consistent with past advances to the same subrecipient under the ERA program, and as with prior delivery of funds, the subrecipient placed the funds in an appropriate account. However, demand for assistance did not unfold as anticipated due to the features of the program and the areas of need ultimately demonstrated by applicants after review and processing of initial applications. As part of the State?s monitoring protocols, and in part because of a lower initial expenditure rate than expected, the subrecipient began providing biweekly reports on the usage of funds, which the State has used as a measure of cash on hand. Moreover, the State also engages in standing, calendared, weekly calls with the subrecipient to discuss these reports. The State has provided documentation to support the process outlined above as well. Finally, as a result of the State?s remaining HAF allocation having already been provided to the subrecipient, the recommended corrective action is not feasible. However, the State acknowledges the need to more formally memorialize its review of the subrecipient?s cash on hand. As a result, the biweekly reports received and reviewed by the State will now include a specific section providing such information; review and discussion of that data will be incorporated into the weekly calls with the subrecipient, and the process and protocols will be documented in the State?s transaction processing memo for the program. Corrective Action Incorporation of cash on hand related data in biweekly reports received and reviewed by the State, documentation of that review as part of the weekly calls with subrecipient, and memorialization of the process and protocols in the State?s transaction processing memo for its HAF program. Anticipated Completion Date: Cash on hand data into biweekly reports and documentation of review said data as part of weekly calls with the subrecipient is being is actively being incorporated as of this response. The State will ensure that the transaction processing memo is updated with the requisite processes and protocols during the next update before the end of Q1 2023. Contact Persons: Chase Hagman, Lisa Cota-Robles, and Michele Zangri-Crean
Finding Reference Number: 2022-007 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Homeowners Assistance Fund Program (Assistance Listing #21.026) Federal Award Numbers: HAFP-0190 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must: 1. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 2. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, 2 CFR section 200.303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition The New Hampshire Governor?s Office of Emergency Relief and Recovery (the Office) entered into a subrecipient grant agreement whereby the subrecipient is responsible for determining benefit eligibility as well as calculating the benefit amount that the participant is eligible to receive. During the year ended June 30, 2022, the Department passed through $49,250,000 to its subrecipient. As part of our testwork over the subrecipient monitoring process, we noted the following: A. The Office obtains bi-weekly reports from the subrecipient that provides information related to cumulative cases, status of the case as well as geographic data surrounding the counties assisted. We selected 1 of the 3 bi-weekly reports received by the Office and noted that while the report was received, there was no documented evidence to support that the Office had reviewed the report as part of its monitoring procedures. B. The subrecipient has a quality control process in place whereby it selects samples of cases to ensure that the eligibility determination for the case was appropriate and there is appropriate documentation to substantiate the amount paid to the participant. The subrecipient submits a QC report to the Office summarizing the results of the review, including any items that require corrective action. We selected 2 of the 4 QC reports received by the Office during the audit period and noted that while the QC reports were received by the Office, there was no documented evidence to support that the Office had reviewed the QC report as part of its monitoring process. C. The Office obtains and reviews the subrecipients uniform guidance report on an annual basis. The Office currently does not have a process in place to track the date in which the audit report was reviewed. As such, we were unable to determine if the Office reviewed the uniform guidance report timely. Per review of the subrecipient uniform guidance report, there were no matters identified within the audit report that would require the Office to issue a management decision letter. D. As part of the Office?s federal reporting requirements, the Office obtains information directly from the subrecipient that is used to compile federal reports. The Department does not perform any documented monitoring procedures over the data submitted by the subrecipient to ensure that the following data used is by the Office within the report is complete and accurate: a. the number of unique homeowners that received assistance and subset that are classified as socially disadvantaged and 100 percent are median income or less b. the number homeowners and the amount of funding homeowners received, disaggregated by program design element are complete and accurate. Cause The cause of the condition found is due to insufficient procedures for ensuring monitoring activities performed are documented. Per inquiry of management, we noted that the Office meets weekly with the subrecipient and as part of these meetings, the bi-weekly reports, the QC reports and the data collected that is used as the basis for federal reporting are discussed. However, there is no evidence such as meeting minutes or agendas maintained to validate that this review occurred at an appropriate precision level. In addition, the review of the subrecipient?s uniform guidance report is documented along with its risk assessment process, which may not correspond with the actual receipt and review of the uniform guidance report. Effect The effect of the condition found is that the Office did not comply with 2 CFR section 200.332(d) through (f) and may not issue a management decision timely as required in accordance with 2 CFR section 200.521. Questioned Costs None. Recommendation We recommend that the Office formalize policies and procedures and implement the necessary internal controls to ensure that the Office complies with the provisions of CFR section 200.332(d) through (f) and 2 CFR section 200.251. This would include ensuring that: 1. During the award monitoring procedures are documented and any items requiring follow up or a corrective action are resolved timely and 2. Ensure that all uniform guidance reports are collected and reviewed timely so that a management decision letter can be issued within the time period required by federal regulations. 3. Data collected from the subrecipient used to compile federal reports is monitored to ensure that the data is complete and accurate. View of Responsible Officials The State concurs in part with the findings and recommended action. The State?s HAF program fully launched in March 2022 of the Fiscal Year under review, which ended June 30, 2022. On the whole, a more robust subrecipient monitoring framework and process is being implemented during the current Fiscal Year for this program. However, the State has engaged in thorough monitoring of its subrecipient, receiving and reviewing recurring biweekly and quarterly reports. As noted, discussion of those reports takes place during weekly conversations with the subrecipient. However, the State has acknowledged that it needs to more formally memorialize the substance of such conversations to demonstrate such review. This change in protocol and procedure has already been implemented during this Fiscal Year. The State has also engaged in a subrecipient risk assessment and review of audited financials for the purposes of uniform guidance report review. However, its process and protocols will be revised to better demonstrate when such reviews/assessments take place moving forward. Moreover, the State relies on its subrecipient to facilitate the State?s HAF program, which includes collecting and processing data, as outlined in the program?s policy guide manual. A key feature of that process is a detailed quality control protocol. Additionally, during this Fiscal Year, the State engaged in a robust, on-site review of the subrecipient?s quality control protocols and methods, including applicant file review, and found them satisfactory and reliable. The State also works closely with its subrecipient during the quarterly and annual U.S. Treasury reporting processes, which involves reviewing and analyzing data provided by the subrecipient for reporting purposes. This review and the resulting communications can result in corrections to data prior to submission to U.S. Treasury. Corrective Action and Anticipated Completion Date: As of this response, the State has already implemented several corrective actions that align with the recommendations above, including documentation of report review during weekly calls with the subrecipient, timestamping procedures for uniform guidance report review, and on site, detailed review of quality control protocols that involved applicant file review. The State will further ensure that such updated protocols and procedures are memorialized in the Programs? transaction processing memo during its Q1 2023 update, including any protocols necessary to ensure timely issuance of any required management decisions relative to the subrecipient. Contact Person: Chase Hagaman, Lisa Cota-Robles, and Michele Zangri-Crean
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-008 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Federal Award Numbers: SLFRP0145 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Coronavirus State and Local Fiscal Recovery Funds program, the State of New Hampshire (the State) entered into grant agreements with local entities to support allowable activities under the federal program. During the year ended June 30, 2022, the State passed through $2,108,597 to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following breakdown of internal controls: A. The State communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for 5 of the 10 subrecipients selected for testwork, the State did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) was not communicated for 5 of 10 subrecipients selected for testwork. b. Identification of whether the award is R&D was not communicated for 3 of 10 subrecipients selected for testwork. A. For 2 of 10 subrecipients selected for testwork, there was no documented risk assessment performed over the subrecipient. The State indicated that they had previous experience with these 2 subrecipients and based upon the previous relationship a formal risk assessment was not necessary. As part of our audit, we inquired as to whether a risk assessment was performed in connection with other federal awards that were granted to these entities, but a risk assessment was not able to be provided. While a risk assessment was not performed, we noted that for all each of these 2 subrecipients that the State performed during the award monitoring procedures. B. The State did not appear to have policies and procedures in place to determine if a subrecipient had a Uniform Guidance report if the amount awarded to the subrecipient under this program was under the audit threshold of $750,000. Based on our independent review of uniform guidance submissions within the Federal Audit Clearinghouse, none of the 10 subrecipients selected for testwork had a submitted uniform guidance report, and as such, a management decision letter would not have been required to be submitted for the each of the 10 subrecipients. Cause The cause of the condition found is primarily due to insufficient internal controls and procedures to ensure that award identification information is properly communicated, that risk assessments are performed to ensure sufficient during the awarded monitoring is performed and that all subrecipients are reviewed to determine if a uniform guidance audit was issued regardless of amount awarded to the subrecipient. Given the nature of this program, several Departments within the State entered into subrecipient grants resulting in a decentralized process. Not all Departments within the State are experienced with subrecipient relationships and may not have had developed policies to comply with subrecipient monitoring requirements. Effect The effect of the condition found is that the State did not have sufficient internal controls in place in accordance with 2 CFR section 200.303(a)) and 200.332.(a). In addition, subrecipients could have had a uniform guidance report issued in which a management decision letter needed to be issued but as the Department does not evaluate this for subrecipient?s that were not granted more than $750,000, they would not be able to recognize the need for a management decision letter timely. Questioned Costs None. Recommendation We recommend that the State review its existing internal controls, policies, and procedures to ensure that the State complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b), and 2 CFR section 200.251. This would include ensuring that: 1. All required award information is communicated to subrecipients; 2. Documented risk assessments are performed over all subrecipients; and 3. All subrecipients are reviewed regardless of amount awarded to determine if a uniform guidance report was issued and if a management decision letter should be issued. View of Responsible Officials The State largely concurs with the findings and recommendations and has either implemented procedures to address the identified conditions already or will do so. With regard to condition A(a) and (b), although the State illustrated that it includes clauses related to allowed costs in its subawards, including direct and indirect costs, it will work to ensure that agencies entering into such agreements clearly indicate the terms required by Uniform Guidance, including permitted indirect cost rates and whether the award is for R&D. With regard to condition B, the State agrees that risk assessments should have been completed and has since implemented a framework to help ensure that agencies are more consistently conducting and documenting subrecipient risk assessments. With regard to condition C, the State concurs and has already implemented an agency-wide framework to help ensure procedures and policies are in place concerning Uniform Guidance Report review and the issuance of any necessary management decision letters, to the extent required. It is worth noting that the State in most cases has timely conducted risk assessments of subrecipients and reviewed relevant Uniform Guidance Reports, but its corrective actions will result in better documentation and more consistent and timelier follow through. Anticipated Completion Date: The corrective actions indicated above relative to conditions B and C have already been implemented as of the date of this response. The State will work to address Condition A before the end of the current Fiscal Year. Contact Person: Chase Hagaman and Steve Giovinelli
Finding Reference Number: 2022-009 NH Governor?s Office of Emergency Relief and Recovery COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Federal Award Numbers: SLFRP0145 Federal Award Year: 2021 U.S. Department of Treasury Compliance Requirement: Suspension and Debarment Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Prior to entering into subawards and contracts with award funds, recipients must verify that such contractors and subrecipients are not suspended, debarred, or otherwise excluded pursuant to 31 CFR section 19.300. Non-federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a pass-through entity (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over suspension and debarment, we noted the following as of the year ending June 30, 2022: A. For 9 of 48 items selected for testwork we associated with statewide consulting contracts. Based on discussions with the New Hampshire Department of Administrative Services, they were unaware of any disbarment provisions for Professional Engineers, Registered Architects, or their consulting firms. As a result, we found no evidence that a suspension and debarment certification had been obtained from the contractor or that an independent search of SAM.gov was performed. B. For 10 of 48 items selected for testwork, the State entered into a grant agreement with municipalities that provided funds for the purchase of equipment. The State indicated that these agreements represented direct beneficiary awards as part of the Locality Equipment Purchase Program and as the municipality was a direct beneficiary, suspension and debarment checks were not required. In reviewing 31 CFR section 19.300 we were unable to validate that these subrecipients were exempt from suspension and debarment requirements. C. For 2 of 48 items selected for testwork, the contract did not include a suspension and debarment certification and the entity was not included in SAM.gov. As a result, it is unclear if these entities were suspended or debarred from receiving federal funds. Cause The cause of the condition found is primarily due to insufficient internal controls and procedures to ensure that for all covered transactions the State determines if the entity covered has been suspended or debarred. Effect The effect of the condition found is that the funds could be paid to an entity that has been suspended or debarred and costs paid to the entity would be unallowable. Questioned Costs Not determinable. Recommendation We recommend that the State review its existing policies and procedures related to suspension and debarment and ensure that all covered transactions with entities are properly reviewed to ensure that the entity has not been suspended and debarred. View of Responsible Officials The State concurs. The State will review and strengthen existing policies and procedures related to suspension and debarment to improve compliance. Anticipated Completion Date: December 2023 Contact Person: Chase Hagaman and Steven Giovinelli
Finding Reference Number: 2022-010 NH Department of Business and Economic Affairs COVID-19 State Small Business Credit Initiative Technical Assistance Grant Program (Assistance Listing #21.031) Federal Award Numbers: NOI-0000178 Federal Award Year: 2022 U.S. Department of Treasury Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include those procurement contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: EPLS is no longer a separate system; however, the OMB guidance and agency implementing regulations still refer to it as EPLS), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Additionally, 2 CFR section 200.303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During the year ended June 30, 2022, we noted that the New Hampshire Department of Business and Economic Affairs (the Department) passed through funds to a subrecipient in the amount of $19,661,597. As part of our testwork over suspension and debarment, we noted the Department was unable to provide documentation to support it had verified whether the single subrecipient it had entered into a grant agreement with was suspended or debarred. Based on our review of the System for Award Management (SAM) Exclusion?s website, the subrecipient was not included within the exclusion list indicating that they had been suspended or debarred. Cause The cause of the condition found was the result of the Department being unaware that the agreement they entered into was a subrecipient relationship and that they were required to document that they verified the subrecipient was not suspended or debarred. Effect The effect of the condition found is that the Department could have entered into an agreement with a subrecipient that had been suspended or debarred from receiving federal funds and would not have the necessary internal controls and procedures to identify the suspended or debarred vendor timely. Additionally, the Department was not in compliance with 2 CFR section 180.300. Questioned Costs None. Recommendation We recommend that the Department review its existing policies, procedures, and related internal controls to ensure signed suspension and debarment certifications are in place or the excluded parties listing is reviewed prior to entering a covered transaction with vendors. The Department should also consider whether procedures should be implemented to independently review the System for Award Management Exclusions website to verify if a vendor has been suspended or debarred. View of Responsible Officials The Department acknowledges the misinterpretation of the agreement as a subaward has led to a failure to comply with 2 CFR section 180. Underlying this misinterpretation was the Department?s failure to differentiate between entering into agreements with other state agencies and entities recognized as component units of state government such as the NH Business Finance Authority; noting suspension and debarment policies and procedures do not apply to agreements between state agencies. Accordingly, the Department will review existing policies and procedures related to suspension and debarment certifications to ensure agreements with component units of state government are properly considered. Anticipated Completion Date: June 30, 2023 Contact Person: Taylor Caswell
Finding Reference Number: 2022-011 NH Department of Business and Economic Affairs COVID-19 State Small Business Credit Initiative Technical Assistance Grant Program (Assistance Listing #21.031) Federal Award Numbers: NOI-0000178 Federal Award Year:2022 U.S. Department of Treasury U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the State Small Business Credit Initiative Technical Assistance Grant Program (SSBCI), the New Hampshire Department of Business and Economic Affairs (the Department) entered into a Memorandum of Understanding with a subrecipient that met the requirements of a first tier subaward under the Transparency Act and as such a FFATA report was required to be filed. During the period ending June 30, 2022, the Department did not file the required FFATA report. Cause The cause of the condition found was the result of the Department being unaware that the agreement they entered was a subrecipient relationship and that they were required to submit a FFATA report. Effect The effect of the condition found is that the Department did not comply with the reporting provisions of the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures to ensure that all required FFATA reports are filed and filed timely for all subrecipient grant agreements that meet the definition of a first tier subaward. View of Responsible Officials The Department acknowledges the misinterpretation of the agreement as a subaward has led to a failure to comply with 2 CFR 170. Underlying this misinterpretation was the Department?s failure to differentiate between entering into agreements with other state agencies and entities recognized as component units of state government such as the NH Business Finance Authority; noting FFATA reporting would not apply to agreements between state agencies. Accordingly, the Department will review existing policies and procedures related to FFATA reporting to ensure agreements with component units of state government are properly considered and reported. Anticipated Completion Date: June 30, 2023 Contact Person: Taylor Caswell
Finding Reference Number: 2022-012 NH Department of Business and Economic Affairs COVID-19 State Small Business Credit Initiative Technical Assistance Grant Program (Assistance Listing #21.031) Federal Award Numbers: NOI-0000178 Federal Award Year: 2022 U.S. Department of Treasury Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria In accordance with 2 CFR section 200.1, a subrecipient is an entity, usually but not limited to non-federal entities, that receives a subaward from a pass-through entity to carry out part of a federal award; but does not include an individual that is a beneficiary of such award. A pass-through entity must clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a). The following items are required to be communicated: a. Subrecipient name (which must match the name associated with its unique entity identifier); b. Subrecipient's unique entity identifier; c. Federal Award Identification Number (FAIN); d. Federal Award Date (see ? 200.39 Federal award date) of award to the recipient by the Federal agency; e. Subaward Period of Performance Start and End Date; f. Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; g. Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current obligation; h. Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; i. Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); j. Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; k. CFDA Number and Name; the pass-through entity must identify the dollar amount made available under each Federal award and the CFDA number at time of disbursement; l. Identification of whether the award is R&D; and m. Indirect cost rate for the Federal award (including if the de minimis rate is charged per ? 200.414 Indirect (F&A) costs). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the State Small Business Credit Initiative Technical Assistance Grant Program (SSBCI), the New Hampshire Department of Business and Economic Affairs (the Department) entered into a Memorandum of Understanding (MOU) with a subrecipient that passed through all programmatic and financial responsibilities of the federal award to the subrecipient. The total amount of funds passed through during the period ending June 30, 2022 was $19,661,597. During our review of the MOU, the Department did not communicate any of the required award information outlined within 2 CFR 200.332(a). Cause The cause of the condition found was the result of the Department being unaware that the agreement they entered was a subrecipient relationship and that they were required to communicate the required award information contained within 2 CFR 200.332(a). Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that the Department complies with the provisions of 2 CFR section 200.332(a) by ensuring that all required award information is communicated to subrecipients. View of Responsible Officials The Department acknowledges the misinterpretation of the agreement as a subaward has led to a failure to comply with 2 CFR section 200.332(a). Underlying this misinterpretation was the Department?s failure to differentiate between entering into agreements with other state agencies and entities recognized as component units of state government such as the NH Business Finance Authority; noting agreements between state agencies would not require such compliance. Accordingly, the Department will review existing policies and procedures related to subawarding and subrecipient monitoring to ensure agreements with component units of state government are properly considered. Additionally, the Department will amend the existing agreement to ensure required award information is communicated and ensure all other subrecipient monitoring protocols are applied to the subaward. Anticipated Completion Date: June 30, 2023 Contact Person: Taylor Caswell
Finding Reference Number: 2022-013 NH Department of Education Title I Grants to Local Educational Agencies (Title I, Part A of ESEA (Assistance Listing #84.010)) Federal Award Numbers: S010A200029, S010A210029 Federal Award Year: 2021, 2022 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-013 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $42,672,742 in Title I Grants to Local Educational Agencies funds to subrecipients (LEAs). During our testwork over FFATA reporting at the Department for Title I Grants, we selected 60 FFATA reports for testing and noted none were reported. Specifically, we noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement policies and procedures which include internal controls across the Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-014 NH Department of Education Special Education Cluster (Assistance Listing #84.027 and #84.173) Federal Award Numbers: H027A210103, H173A210109, H027A180103, H173A180109 Federal Award Year: 2021, 2022 U.S. Department of Education Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, the New Hampshire Department of Education (the Department) passed through $50,310,796 of federal funding to 174 subrecipients. As part of our testing related subrecipient monitoring, we noted that the Department communicates to subrecipients through the Grant Award Notifications (GANs). Per review of the GAN, we noted the following: A. For 44 of 44 subrecipients selected for testwork, the Department did not communicate the federal award identification number. B. For 15 of 44 subrecipients selected for testwork, the Department did not communicate the full award amount. Instead, the Department only communicated the subrecipients first installment amount entered into Grant Management System (GMS) which is a portion of the subrecipient?s total federal funding allocation. Cause The cause of the condition found was primarily due to breakdown of internal controls to ensure that the Grant Award Notification sent to subrecipients includes all required award data elements, including federal award identification number and full award amount. Effect The effect of the condition found is that the Department may not be in compliance with 2 CFR section 200.332(a)(1). Questioned Costs Not determinable. Recommendation We recommend that the Department review its existing policies and procedures over subrecipient monitoring award identification requirements and revise procedures and internal controls to ensure that information described in 2 CFR section 200.332(a)(1) is clearly identified to the subrecipient at the time of subaward (or subsequent subaward modification). View of Responsible Officials NHED concurs with the finding identified in section A. This was an oversight on the part of NHED, and a process has been implemented to ensure that when the GAN template is generated, there is a review by 2 separate staff members to ensure all required elements on the GAN are complete. NHED concurs with the finding identified in Section B. The previous Division Director of Learner Support, without understanding the unintended consequences, required that the IDEA allocations be uploaded in separate installments instead of including the full year award amount. This led to a GAN generation that included only the first installment. This procedure has since been corrected and NHED is now uploading the full year allocation amount in GMS, this will then generate a GAN that reflects the full year grant amount. If a reallocation does occur, there is a review by 2 separate staff members to ensure that the amount is verified and that a new GAN is manually generated to include that verified amount, and then the GAN is reissued to the recipient. Anticipated Completion Date: Already completed Contact Person: Lindsey Labonville
Finding Reference Number: 2022-015 NH Department of Education Special Education Cluster (Assistance Listing #84.027 and #84.173) Federal Award Numbers: H027A180103, H027A190103, H027A210103 Federal Award Year: 2018, 2019, 2021 U.S. Department of Education Compliance Requirement: Period of Performance Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria LEAs and SEAs must obligate funds during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15-month period of initial availability plus a 12-month period for carryover. For example, funds from the fiscal year 2019 appropriation initially became available on July 1, 2019; and may be obligated by the grantee and subgrantee through September 30, 2021 (Section 421(b) of GEPA (20 USC 1225(b)); 34 CFR sections 76.703 through 76.710). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over period of performance at the New Hampshire Department of Education (the Department), we noted for 12 of 12 expenditures selected for testing awards that started during the state fiscal year, the Department had charged the expense to the new federal fiscal year grant, however, the date of service on the invoice was for a period prior to the start of that federal award. Furthermore, during our testwork over period of performance at the New Hampshire Department of Education (the Department), we noted for 12 of 40 expenditures selected for testing awards that ended/liquidated during the state fiscal year, the Department had charged the expense to the old federal fiscal year grant, however, the date of service on the invoice was for a period subsequent to the end of that federal award. Lastly, the Department had a breakdown of internal controls to ensure that expenditures are charged to the correct CAN for period of performance tracking. Cause The cause of the condition found is due to how the Department charges costs to federal grants and the breakdown of internal controls to ensure that expenditures are charged to the correct CAN for period of performance tracking. Effect The effect of the condition found is that the Department did not comply with the period of performance regulations. Questioned Costs $117,634 - the amount of expenditures charged to the Fiscal Year 2019 award that related to a date of service subsequent to the end of liquidation period for that award $5,811 - the amount of expenditures charged to the Fiscal Year 2021 award that related to a date of service prior to the start of that federal award $593 - the amount of expenditures charged to the Fiscal Year 2018 award that related to a date of service subsequent to the end of liquidation period for that award Recommendation We recommend that the Department implement internal control and policies and procedures to ensure costs are appropriately charged to federal awards based on the incurred date. View of Responsible Officials The Department does not concur. The Department notes extensions are in place related to COVID-19 and the Tydings Amendment through the Department of Education mitigating the condition noted. The Department will confer with the US DE to clarify the extensions in place and resolve any disparities identified within the finding. Anticipated Completion Date: Completed as of the date of this report Contact Person: Lindsey Labonville, Melissa White Rejoinder Based on the supporting documentation provided by the Department, it did not appear that the expenses identified within the condition found were charged to the correct period of performance during the liquidation period. Subsequently management adjusted the CAN the expenses related to which would correct the condition found.
Finding Reference Number: 2022-014 NH Department of Education Special Education Cluster (Assistance Listing #84.027 and #84.173) Federal Award Numbers: H027A210103, H173A210109, H027A180103, H173A180109 Federal Award Year: 2021, 2022 U.S. Department of Education Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria A pass-through entity must clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, the New Hampshire Department of Education (the Department) passed through $50,310,796 of federal funding to 174 subrecipients. As part of our testing related subrecipient monitoring, we noted that the Department communicates to subrecipients through the Grant Award Notifications (GANs). Per review of the GAN, we noted the following: A. For 44 of 44 subrecipients selected for testwork, the Department did not communicate the federal award identification number. B. For 15 of 44 subrecipients selected for testwork, the Department did not communicate the full award amount. Instead, the Department only communicated the subrecipients first installment amount entered into Grant Management System (GMS) which is a portion of the subrecipient?s total federal funding allocation. Cause The cause of the condition found was primarily due to breakdown of internal controls to ensure that the Grant Award Notification sent to subrecipients includes all required award data elements, including federal award identification number and full award amount. Effect The effect of the condition found is that the Department may not be in compliance with 2 CFR section 200.332(a)(1). Questioned Costs Not determinable. Recommendation We recommend that the Department review its existing policies and procedures over subrecipient monitoring award identification requirements and revise procedures and internal controls to ensure that information described in 2 CFR section 200.332(a)(1) is clearly identified to the subrecipient at the time of subaward (or subsequent subaward modification). View of Responsible Officials NHED concurs with the finding identified in section A. This was an oversight on the part of NHED, and a process has been implemented to ensure that when the GAN template is generated, there is a review by 2 separate staff members to ensure all required elements on the GAN are complete. NHED concurs with the finding identified in Section B. The previous Division Director of Learner Support, without understanding the unintended consequences, required that the IDEA allocations be uploaded in separate installments instead of including the full year award amount. This led to a GAN generation that included only the first installment. This procedure has since been corrected and NHED is now uploading the full year allocation amount in GMS, this will then generate a GAN that reflects the full year grant amount. If a reallocation does occur, there is a review by 2 separate staff members to ensure that the amount is verified and that a new GAN is manually generated to include that verified amount, and then the GAN is reissued to the recipient. Anticipated Completion Date: Already completed Contact Person: Lindsey Labonville
Finding Reference Number: 2022-015 NH Department of Education Special Education Cluster (Assistance Listing #84.027 and #84.173) Federal Award Numbers: H027A180103, H027A190103, H027A210103 Federal Award Year: 2018, 2019, 2021 U.S. Department of Education Compliance Requirement: Period of Performance Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria LEAs and SEAs must obligate funds during the 27 months, extending from July 1 of the fiscal year for which the funds were appropriated through September 30 of the second following fiscal year. This maximum period includes a 15-month period of initial availability plus a 12-month period for carryover. For example, funds from the fiscal year 2019 appropriation initially became available on July 1, 2019; and may be obligated by the grantee and subgrantee through September 30, 2021 (Section 421(b) of GEPA (20 USC 1225(b)); 34 CFR sections 76.703 through 76.710). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over period of performance at the New Hampshire Department of Education (the Department), we noted for 12 of 12 expenditures selected for testing awards that started during the state fiscal year, the Department had charged the expense to the new federal fiscal year grant, however, the date of service on the invoice was for a period prior to the start of that federal award. Furthermore, during our testwork over period of performance at the New Hampshire Department of Education (the Department), we noted for 12 of 40 expenditures selected for testing awards that ended/liquidated during the state fiscal year, the Department had charged the expense to the old federal fiscal year grant, however, the date of service on the invoice was for a period subsequent to the end of that federal award. Lastly, the Department had a breakdown of internal controls to ensure that expenditures are charged to the correct CAN for period of performance tracking. Cause The cause of the condition found is due to how the Department charges costs to federal grants and the breakdown of internal controls to ensure that expenditures are charged to the correct CAN for period of performance tracking. Effect The effect of the condition found is that the Department did not comply with the period of performance regulations. Questioned Costs $117,634 - the amount of expenditures charged to the Fiscal Year 2019 award that related to a date of service subsequent to the end of liquidation period for that award $5,811 - the amount of expenditures charged to the Fiscal Year 2021 award that related to a date of service prior to the start of that federal award $593 - the amount of expenditures charged to the Fiscal Year 2018 award that related to a date of service subsequent to the end of liquidation period for that award Recommendation We recommend that the Department implement internal control and policies and procedures to ensure costs are appropriately charged to federal awards based on the incurred date. View of Responsible Officials The Department does not concur. The Department notes extensions are in place related to COVID-19 and the Tydings Amendment through the Department of Education mitigating the condition noted. The Department will confer with the US DE to clarify the extensions in place and resolve any disparities identified within the finding. Anticipated Completion Date: Completed as of the date of this report Contact Person: Lindsey Labonville, Melissa White Rejoinder Based on the supporting documentation provided by the Department, it did not appear that the expenses identified within the condition found were charged to the correct period of performance during the liquidation period. Subsequently management adjusted the CAN the expenses related to which would correct the condition found.
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-016 NH Department of Education COVID-19 Education Stabilization Fund (Assistance Listing #84.425C, #84.425D, #84.425R, #84.425U, #84.425V, and #84.425W) Federal Award Numbers: S425U210017, S425D200017, S425V210041, S425W210030, S425R210041, S425C210032, S425D210017 Federal Award Year: 2020, 2021 U.S. Department of Education Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-015 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Education (the Department) passed through $90,972,223 in Education Stabilization Funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 60 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, in place to ensure timely and accurate FFATA reporting. Effect The effect of the condition found is that the Department did not comply with the Transparency Act. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials DLS has implemented a procedure across all ESF and ESEA programs to ensure timely and accurate reporting. DLS has also partnered with GSA to resolve issues within the FSRS (FFATA) system, however, there seems to be many technical issues on their end that their developers are currently working through. At the time of this finding, the technical issue on GSA?s side hasn?t been resolved. The procedure includes a flow chart, PowerPoint presentation, FAQ document, and process. Additionally, there have been numerous training opportunities both in person and online across the Division to train as many stakeholders as possible in the reporting and monitoring of FFATA to ensure timeliness and accuracy. In-person and online trainings were held on 01/04/23, 01/26/23, and 02/06/23. The United States Department of Education also recently held a FFATA webinar on 01/18/2023, which all ESF and ESEA program personnel involved in FFATA reporting where required to attend. Anticipated Completion Date: 02/06/2023 Contact Person: Jessica Lescarbeau, Bureau Administrator and Lindsey Labonville, Compliance Administrator
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-017 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-019 Statistically Valid Sample: No Criteria Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include those procurement contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: EPLS is no longer a separate system; however, the OMB guidance and agency implementing regulations still refer to it as EPLS), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our compliance testwork related to procurement and suspension and debarment, we noted for 5 of 31 agreements selected for testwork, we noted that the New Hampshire Department of Health and Human Services (the Department) was unable to provide documentation to support it had verified whether the contractor or subrecipient was suspended or debarred. For our control testwork we noted 1 of 5 agreements selected for testwork, the Department was unable to provide documentation to support it had verified whether the vendor was suspended or debarred before entering into the contract or grant agreement. Based on our review of the System for Award Management (SAM) Exclusion?s website, none of the vendors selected for testwork were included within the exclusion list indicating that they had been suspended or debarred. Cause The cause of the condition found was the result of insufficient internal controls in place to ensure that Department suspension debarment policies are followed, and adequate documentation is maintained to support the Departments verification. Effect The effect of the condition found is that the Department could have entered into an agreement with a vendor that had been suspended or debarred from receiving federal funds and would not have the necessary internal controls and procedures to identify the suspended or debarred vendor timely. Additionally, the Department was not in compliance with 2 CFR section 180.300. Questioned Costs Not determinable. Recommendation We recommend that the Department continue to review its existing policies, procedures, and related internal controls to ensure signed suspension and debarment certifications are in place or the excluded parties listing is reviewed prior to entering into a covered transaction with vendors. The Department should also consider whether or not procedures should be implemented to independently review the System for Award Management Exclusions website to verify if a vendor has been suspended or debarred. View of Responsible Officials The Department will review existing internal controls to assess whether they are sufficient to provide management with reasonable assurance the Department complies with the 2 CFR section 180.300. It is important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required attestation for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. All standard templates require vendors to sign a certification regarding suspension and debarment. Anticipated Completion Date: July 2023 Contact Person: Melissa Kelleher, Grants Administrator
Finding Reference Number: 2022-018 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-021 Statistically Valid Sample: No Criteria A pass-through entity (PTE) must: 1. Identify the Award and Applicable Requirements ? Clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.332(a)(1); (2) all requirements imposed by the PTE on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.332(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.332(a)(3)). 2. Evaluate Risk ? Evaluate each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). 3. Monitor ? Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: a. Reviewing financial and programmatic (performance and special reports) required by the PTE. b. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. c. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. 4. Ensure Accountability of For-Profit Subrecipients ? Some federal awards may be passed through to for-profit entities. For-profit subrecipients are accountable to the PTE for the use of the federal funds provided. Because 2 CFR Part 200 does not make Subpart F applicable to for-profit subrecipients, the PTE is responsible for establishing requirements, as necessary, to ensure compliance by for-profit subrecipients for the subaward. The agreement with the for-profit subrecipient must describe applicable compliance requirements and the for-profit subrecipient's compliance responsibility. Methods to ensure compliance for federal awards made to for-profit subrecipients may include pre-award audits, monitoring during the agreement, and post-award audits (2 CFR section 200.501(h)). Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award Condition During the year ended June 30, 2022, the New Hampshire Department of Health and Human Services (the Department) passed through $5,070,789 of federal funding to 56 subrecipients, both for-profit and non-profit. As part of our testing related subrecipient monitoring, we noted the following: A. The Department communicates award information to subrecipients through the approved agreement. Per review of the agreement, for 14 of 14 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332(a). Specifically, one or all of the following elements were not communicated: - Subrecipient unique entity identifier; - Federal award date; - Name of the federal awarding agency, pass-through entity, and contact information for the awarding official of the pass-through entity; - Identification of whether the award is R&D; and - Indirect cost rate for the federal award B. The Department was unable to provide documentation to support it had evaluated subrecipient risk of noncompliance for all subrecipients for purposes of determining the appropriate subrecipient monitoring related to subawards. C. The Department did not perform any during the award monitoring over the programs subrecipients. D. The Department passed through federal funding to for-profit subrecipients. These subrecipients are not subject to 2 CFR 200 Subpart F and as such, no review over the uniform guidance audit report is performed by the Department. The Department was unable to provide documentation to support it had performed procedures to ensure compliance with the subrecipient agreement in accordance with 2 CFR section 200.501(h). Cause The cause of the condition found was primarily due to a lack of formal policies and internal controls to ensure that all required subrecipient monitoring compliance procedures are being performed by the Department. Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a - h) and 2 CFR section 200.501(h). Questioned Costs None. Recommendation We recommend the Department develop policies and procedures and implement internal controls to ensure that the Department complies with 2 CFR section 200.332(a-h) and 2 CFR section 200.501(h). View of Responsible Officials The Department will review its Sub-recipient Monitoring Policy and assess compliance across the Department. It is important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required notifications for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. The Financial Compliance Unit (FCU) will continue to work with the Business System Analyst of the Cost Allocation Unit in determining the amount of Federal payments made to the vendors. The FCU receives a vendor payment list on a quarterly basis that includes the total amount of Federal funds that were paid to all contracted agencies. We will continue to closely monitor the FAC to obtain all copies of the Single Audits pertaining to the DHHS agencies. In addition, we will devise a spreadsheet that will list all contracts that have been awarded Federal funds and cross check these agencies to vendor payment list. The DHHS updated the policy on risk assessment on November 16, 2020 to ensure that all contracts have a risk assessment performed regardless of funding source. We also have added verbiage in the contracts effective for contracts that begin after November 2021. It states any Contractor that receives an amount equal to or greater than $250,000 from the Department during a single fiscal year, regardless of the funding source, may be required, at a minimum, to submit annual financial audits performed by an independent CPA if the Department?s risk assessment determination indicates the Contractor is high-risk. Finally, effective for any new procurement subsequent to March 2022, all back-up documentation must accompany the invoices and be submitted on a monthly basis. Anticipated Completion Date: July 2023 Contact Person: Melissa Kelleher, Grants Administrator, Ann Driscoll, Financial Compliance Unit
Finding Reference Number: 2022-019 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program, the New Hampshire Department of Health and Human Services (the Department) reports financial information to the CDC on a monthly basis including expenditures paid out and the amount of unliquidated obligations for the reporting period. For 11 of 31 monthly reports selected for testwork, there was no documentation maintained to evidence Department review of the monthly reports prior to submission to CDC. Cause The cause of the condition found was the result of insufficient internal controls in place to ensure that Department monthly reporting policies are followed, and documentation of review is maintained. Effect The effect of the condition found is that the Department did not comply with the provisions of the Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that all required monthly financial reports are reviewed prior to being filed timely and documentation of review is maintained. View of Responsible Officials We concur. The Department has been reviewing and second reviewing all required monthly financial reports and maintaining documentation since January 2022. We believe this current control in place allows us to remain in compliance with all requirements. Anticipated Completion Date: March 2, 2023 Contact Person: Shelley Swanson, DPHS Finance Director
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-017 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Procurement and Suspension and Debarment Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-019 Statistically Valid Sample: No Criteria Non-Federal entities are prohibited from contracting with or making subawards under covered transactions to parties that are suspended or debarred. ?Covered transactions? include those procurement contracts for goods and services awarded under a non-procurement transaction (e.g., grant or cooperative agreement) that are expected to equal or exceed $25,000 or meet certain other criteria as specified in 2 CFR section 180.220. All non-procurement transactions entered into by a recipient (i.e., subawards to subrecipients), irrespective of award amount, are considered covered transactions, unless they are exempt as provided in 2 CFR section 180.215. When a non-Federal entity enters into a covered transaction with an entity at a lower tier, the non-Federal entity must verify that the entity, as defined in 2 CFR section 180.995 and agency adopting regulations, is not suspended or debarred or otherwise excluded from participating in the transaction. This verification may be accomplished by (1) checking the Excluded Parties List System (EPLS) maintained by the General Services Administration (GSA) and available at https://www.sam.gov/portal/public/SAM/ (Note: EPLS is no longer a separate system; however, the OMB guidance and agency implementing regulations still refer to it as EPLS), (2) collecting a certification from the entity, or (3) adding a clause or condition to the covered transaction with that entity (2 CFR section 180.300). Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our compliance testwork related to procurement and suspension and debarment, we noted for 5 of 31 agreements selected for testwork, we noted that the New Hampshire Department of Health and Human Services (the Department) was unable to provide documentation to support it had verified whether the contractor or subrecipient was suspended or debarred. For our control testwork we noted 1 of 5 agreements selected for testwork, the Department was unable to provide documentation to support it had verified whether the vendor was suspended or debarred before entering into the contract or grant agreement. Based on our review of the System for Award Management (SAM) Exclusion?s website, none of the vendors selected for testwork were included within the exclusion list indicating that they had been suspended or debarred. Cause The cause of the condition found was the result of insufficient internal controls in place to ensure that Department suspension debarment policies are followed, and adequate documentation is maintained to support the Departments verification. Effect The effect of the condition found is that the Department could have entered into an agreement with a vendor that had been suspended or debarred from receiving federal funds and would not have the necessary internal controls and procedures to identify the suspended or debarred vendor timely. Additionally, the Department was not in compliance with 2 CFR section 180.300. Questioned Costs Not determinable. Recommendation We recommend that the Department continue to review its existing policies, procedures, and related internal controls to ensure signed suspension and debarment certifications are in place or the excluded parties listing is reviewed prior to entering into a covered transaction with vendors. The Department should also consider whether or not procedures should be implemented to independently review the System for Award Management Exclusions website to verify if a vendor has been suspended or debarred. View of Responsible Officials The Department will review existing internal controls to assess whether they are sufficient to provide management with reasonable assurance the Department complies with the 2 CFR section 180.300. It is important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required attestation for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. All standard templates require vendors to sign a certification regarding suspension and debarment. Anticipated Completion Date: July 2023 Contact Person: Melissa Kelleher, Grants Administrator
Finding Reference Number: 2022-018 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-021 Statistically Valid Sample: No Criteria A pass-through entity (PTE) must: 1. Identify the Award and Applicable Requirements ? Clearly identify to the subrecipient: (1) the award as a subaward at the time of subaward (or subsequent subaward modification) by providing the information described in 2 CFR section 200.332(a)(1); (2) all requirements imposed by the PTE on the subrecipient so that the federal award is used in accordance with federal statutes, regulations, and the terms and conditions of the award (2 CFR section 200.332(a)(2)); and (3) any additional requirements that the PTE imposes on the subrecipient in order for the PTE to meet its own responsibility for the federal award (e.g., financial, performance, and special reports) (2 CFR section 200.332(a)(3)). 2. Evaluate Risk ? Evaluate each subrecipient?s risk of noncompliance for purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 200.332(b)). 3. Monitor ? Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f)). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required by the terms and conditions of the award, subaward monitoring must include the following: a. Reviewing financial and programmatic (performance and special reports) required by the PTE. b. Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the PTE detected through audits, on-site reviews, and other means. c. Issuing a management decision for audit findings pertaining to the federal award provided to the subrecipient from the PTE as required by 2 CFR section 200.521. 4. Ensure Accountability of For-Profit Subrecipients ? Some federal awards may be passed through to for-profit entities. For-profit subrecipients are accountable to the PTE for the use of the federal funds provided. Because 2 CFR Part 200 does not make Subpart F applicable to for-profit subrecipients, the PTE is responsible for establishing requirements, as necessary, to ensure compliance by for-profit subrecipients for the subaward. The agreement with the for-profit subrecipient must describe applicable compliance requirements and the for-profit subrecipient's compliance responsibility. Methods to ensure compliance for federal awards made to for-profit subrecipients may include pre-award audits, monitoring during the agreement, and post-award audits (2 CFR section 200.501(h)). Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award Condition During the year ended June 30, 2022, the New Hampshire Department of Health and Human Services (the Department) passed through $5,070,789 of federal funding to 56 subrecipients, both for-profit and non-profit. As part of our testing related subrecipient monitoring, we noted the following: A. The Department communicates award information to subrecipients through the approved agreement. Per review of the agreement, for 14 of 14 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332(a). Specifically, one or all of the following elements were not communicated: - Subrecipient unique entity identifier; - Federal award date; - Name of the federal awarding agency, pass-through entity, and contact information for the awarding official of the pass-through entity; - Identification of whether the award is R&D; and - Indirect cost rate for the federal award B. The Department was unable to provide documentation to support it had evaluated subrecipient risk of noncompliance for all subrecipients for purposes of determining the appropriate subrecipient monitoring related to subawards. C. The Department did not perform any during the award monitoring over the programs subrecipients. D. The Department passed through federal funding to for-profit subrecipients. These subrecipients are not subject to 2 CFR 200 Subpart F and as such, no review over the uniform guidance audit report is performed by the Department. The Department was unable to provide documentation to support it had performed procedures to ensure compliance with the subrecipient agreement in accordance with 2 CFR section 200.501(h). Cause The cause of the condition found was primarily due to a lack of formal policies and internal controls to ensure that all required subrecipient monitoring compliance procedures are being performed by the Department. Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a - h) and 2 CFR section 200.501(h). Questioned Costs None. Recommendation We recommend the Department develop policies and procedures and implement internal controls to ensure that the Department complies with 2 CFR section 200.332(a-h) and 2 CFR section 200.501(h). View of Responsible Officials The Department will review its Sub-recipient Monitoring Policy and assess compliance across the Department. It is important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required notifications for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. The Financial Compliance Unit (FCU) will continue to work with the Business System Analyst of the Cost Allocation Unit in determining the amount of Federal payments made to the vendors. The FCU receives a vendor payment list on a quarterly basis that includes the total amount of Federal funds that were paid to all contracted agencies. We will continue to closely monitor the FAC to obtain all copies of the Single Audits pertaining to the DHHS agencies. In addition, we will devise a spreadsheet that will list all contracts that have been awarded Federal funds and cross check these agencies to vendor payment list. The DHHS updated the policy on risk assessment on November 16, 2020 to ensure that all contracts have a risk assessment performed regardless of funding source. We also have added verbiage in the contracts effective for contracts that begin after November 2021. It states any Contractor that receives an amount equal to or greater than $250,000 from the Department during a single fiscal year, regardless of the funding source, may be required, at a minimum, to submit annual financial audits performed by an independent CPA if the Department?s risk assessment determination indicates the Contractor is high-risk. Finally, effective for any new procurement subsequent to March 2022, all back-up documentation must accompany the invoices and be submitted on a monthly basis. Anticipated Completion Date: July 2023 Contact Person: Melissa Kelleher, Grants Administrator, Ann Driscoll, Financial Compliance Unit
Finding Reference Number: 2022-019 NH Department of Health and Human Services Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Federal Award Numbers: NUK50CK000522 Federal Award Year: 2019 U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) program, the New Hampshire Department of Health and Human Services (the Department) reports financial information to the CDC on a monthly basis including expenditures paid out and the amount of unliquidated obligations for the reporting period. For 11 of 31 monthly reports selected for testwork, there was no documentation maintained to evidence Department review of the monthly reports prior to submission to CDC. Cause The cause of the condition found was the result of insufficient internal controls in place to ensure that Department monthly reporting policies are followed, and documentation of review is maintained. Effect The effect of the condition found is that the Department did not comply with the provisions of the Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that all required monthly financial reports are reviewed prior to being filed timely and documentation of review is maintained. View of Responsible Officials We concur. The Department has been reviewing and second reviewing all required monthly financial reports and maintaining documentation since January 2022. We believe this current control in place allows us to remain in compliance with all requirements. Anticipated Completion Date: March 2, 2023 Contact Person: Shelley Swanson, DPHS Finance Director
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-020 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provisions: Child Support Non-Cooperation Type of Finding: Significant Deficiency Prior Year Finding: 2021-023 Statistically Valid Sample: No Criteria If the State agency responsible for administering the State plan under Title IV-D of the Social Security Act determines that an individual is not cooperating with the State in establishing paternity, or in establishing, modifying or enforcing a support order with respect to a child of the individual, and reports that information to the State agency responsible for TANF, the State TANF agency must (1) deduct an amount equal to not less than 25% from the TANF assistance that would otherwise be provided to the family of the individual and (20 may deny the family any TANF assistance. Health and Human Services (HHS) may penalize a State for up to 5% of the SFAG for failure to substantially comply with this required State child support program (45 CFR sections 264.30 and 264.31) Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our testwork over sanctions imposed for child support non-cooperation, we noted the following: A. For 1 of 9 cases selected for testwork, we noted that while the date of non-cooperation was September 14, 2021, the Department did not assess the required sanction for non-cooperation until the October 16, 2021 benefit payment period, resulting in the participant being overpaid approximately $222. B. As part of our testwork over sanctions imposed on single custodial parents of children under the age of 6, we noted that for 1 of 7 cases selected for testwork, the participant was not sanctioned due to inability to obtain childcare, but instead the case was sanctioned due to child support non-cooperation. Per review of the participant case file, the letter of non-cooperation required to establish the sanction was not maintained within the case file. As a result, it was unclear if the participant should have been sanctioned. Cause The cause of the condition found was a result of insufficient internal controls in place to ensure that required forms are obtained and maintained within the participant?s case file and to ensure that sanctions are applied timely and appropriately. Effect The effect of the condition found is that a breakdown in internal controls allowed for participant benefit payments to be inaccurate resulting in unallowable costs charged to the federal program or sanctions could have been imposed that were not appropriate. Questioned Costs $222 ? the overpayment in condition A above. Recommendation We recommend that the Department continue to enhance its existing internal controls and procedures to ensure the documentation used to support the beginning and termination of sanction periods is maintained and timely communicated so that sanctions are applied to participant benefit payments timely and appropriately. View of Responsible Officials Condition A We concur. The department received the notice of non-cooperation on 9/14/21 and did not enter the non-cooperation until 9/29/21, which was beyond the 10-day time frame. The case should have then been confirmed to impose the sanction on or before 9/24/21. This resulted in the client being over issued by approximately $222.37. Condition B We concur. The sanction for non-cooperation with Child Support was entered in error as Child Support did not issue a non-compliance. This resulted in the client being under issued by approximately $446.50 Follow-up We will be informing all supervisors of the specific errors found during the audit. We will also require supervisors to include these topics at their next staff meeting. In addition, individual emails will be sent to the staff involved with the errors and provide guidance. Anticipated Completion Date: N/A Contact Person: Karyl Provost
Finding Reference Number: 2022-021 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: NA Statistically Valid Sample: No Criteria5 A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 4. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Temporary Assistance for Needy Families program (TANF), the New Hampshire Department of Health and Human Services (the Department) enters into grant agreements with local entities to provide services to support eligible participants. During the year ended June 30, 2022, the Department passed through $3,307,974 to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following: A. For 1 of 7 subrecipients selected for testwork, per review of the grant agreement, we noted that the agreement did not contain any funding to be paid under the TANF program and should not have been identified as a TANF subrecipient. The total amount paid to the entity was $13,530. B. The Department communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for 4 of the remaining 6 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. The subrecipient?s unique identifier was not communicated for 1 of the remaining 6 subrecipients selected for testwork b. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) was not communicated for 2 of the remaining 6 subrecipients selected for testwork c. Identification of whether the award is R&D was not communicated for 4 of the remaining 6 subrecipients selected for testwork. C. The Department did not perform a risk assessment for all subrecipients selected for testwork. As a result, it is unclear if any additional targeted subrecipient monitoring should have been performed. D. For 1 of the remaining 6 subrecipients selected for testwork, there was no evidence that a programmatic monitoring review was completed for the subrecipient as required by their subrecipient monitoring policy. As there was no risk assessment performed for the subrecipient, it was unclear as to whether a programmatic monitoring visit should have been performed. Cause The cause of the condition found is primarily due to insufficient internal controls and procedures to ensure that federal reimbursement of expenditures are only disbursed to entities that have an approved subrecipient grant agreement. In addition, there are insufficient internal controls and procedures to ensure that award identification information is properly communicated with grant agreements and that risk assessments are performed to ensure sufficient during the awarded monitoring is performed over all subrecipients. Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a), section 200.332(b), CFR section 200.521 and 2 CFR sections 200.332(d) through (f). Questioned Costs $13,530 ? the amount in bullet A above. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that the Department complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b), 2 CFR sections 200.332(d) through (f), and 2 CFR section 200.251. This would include ensuring that: 1. The Department has an approved subrecipient grant agreement prior to making any disbursements to an entity; 2. All required award information is communicated to subrecipients; 3. A documented risk assessment is performed over all subrecipients, and the results of that risk assessment is used to evaluate the types of monitoring procedures that will be performed over the subrecipient; and 4. As a result of the risk assessment performed, monitoring activities are performed over subrecipients to ensure compliance with the terms and conditions of its subrecipient grant agreement. View of Responsible Officials A. We concur with this finding. The Department utilized an internally available copy of the Management Log, which lists vendor?s determinations. This is a copy of the log, not the original, official copy. There is a delay in updating this copy from the original, and incorrect information had been initially entered. The Department is moving this log to software which allows all Department employees to view the same log, while limiting the number of individuals who have access to make changes. Implementation has been completed as of March 2023. B. We concur with this finding. However, we believe this was an isolated incident as the TANF CFDA number (93.558) used was very similar to correct CFDA number (93.778) that should have been documented. C. 200.332 requirements a. We do not concur with this finding. The contract for Mt Prospect became effective 8/4/21, prior to the 4/22 inception of the UEI. The DUNS number, as in effect at that time, is noticed in Exhibit J of the contract. b. We concur with three of the four findings. Two of the four contracts pre-date the template update requiring the notice an indirect cost rate. Indirect cost rate for federal awards (including if the de minimis rate is charged per 2 CFR section 200.414) were added to Exhibit C of the Department?s contracts in April 2020. One of the contracts did not indicate an indirect cost rate as required. One of the contracts notes the indirect cost rate in the Notes of their financial details. c. One of the two contracts pre-dates the template update requiring the notice the identification of R&D. R&D identifications for federal awards were added to Exhibit C of the Department?s contracts in April 2020 One of the two contracts did not identify whether the contract was R&D as required. D. Subrecipient Risk Assessment ? We concur with the finding. We consider the finding to be fully resolved through Department policy Department policy and Department wide implementation. However, it should be noted full compliance will not be achieved for one to two contact cycles due to timing. The Department began addressing the issue of Subrecipient Monitoring issue in June 2017 when the first Grants Administrator was hired. The Department finalized the Subrecipient Monitoring Policy, which encompasses the financial and programmatic risk assessments as well as the subrecipient monitoring, on June 1, 2018. The Department provided user training on the subject in February and September 2018, training over one hundred forty-six staff. However, only brand new procurements utilized this policy during the initial roll out of this policy. The Department hired a new Grants Administrator in May 2019. The full Subrecipient Monitoring policy rolled out to all procurements, including sole source, amendments, and renewals, effective August 1, 2020. The Contracts Unit received specialized subrecipient monitoring training on May 13 and October 28, 2020. Department wide training to all staff occurred weekly between September 8 and November 3, 2020. The Grants Office provided additional targeted training to Program staff through team meetings. Over one hundred fifty Program and Finance staff received training. Annual training will be held in September each year. Refresher training or training for new staff is available upon request from the Grants Office. The Grants Office website offers Program, Finance, and Contracts Bureau staff access to the subrecipient monitoring policy, as well as training modules, slides, and tools. The training has also been recorded and is available on this site. The Subrecipient Monitoring Policy requires Program to determine whether any vendor which receives funds in exchange for goods or services is a Contractor or Subrecipient. Determined subrecipients receive a Management Questionnaire, which includes a ten question questionnaire and requirements for submitting financial data. This information is used to populate the Risk Assessment Tool, which shows any risks pertinent to a subrecipient and the subaward. Based on the risks shown, Program chooses monitoring activities to mitigate the risks and the Contracts Bureau memorializes these choices in the contract. The Grants Office continues to work closely with the Contracts Bureau to ensure compliance with the Subrecipient Monitoring policy. C. and D. It is also important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates, which did not include the required notifications under 200.332, were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required notifications for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. E. We concur there was no formal documentation of any monitoring activity. Due to staff turnover a new administrator has been hired and unable to furnish the monitoring that took place during FY22. However, a program site review during FY23 was performed and financial monitoring of invoices has also taken place. Anticipated Completion Date: July, 2023 Contact Person: Melissa Kelleher, Administrator Rejoinder As documented above in Bullet B of the condition found, the Department did not properly communicate all required award information to the subrecipient. Once aware of the noncompliance, the Department should have timely communicated this information to its subrecipients.
Finding Reference Number: 2022-022 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Matching, Level of Effort and Earmarking ? Maintenance of Effort Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-024 Statistically Valid Sample: No Criteria Every fiscal year, a State must maintain an amount of ?qualified state expenditures? (as defined in 42 US609(a)(7)(B) and 45 CFR section 263.2) for eligible families (as defined in 42 USC 609(a)(7)(B)(i)(IV) and 45 CFR section 263.2(b)) at least at the applicable percentage of the State?s historic State expenditures. Qualified expenditures with respect to eligible families may come from all programs. This requirement may be met through allowable state or local cash expenditures for goods and services, cash donations by non-governmental third parties, or the value of third-party in-kind contributions. A State?s records must show that all costs are verifiable and meet all applicable requirements in 45 CFR sections 263.2 through 263.6.45. Additionally, 45 CFR 75 section 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition For the federal fiscal year end September 30, 2021, the New Hampshire Department of Health and Human Services (the Department) was required to meet an annual maintenance of effort (MOE) requirement of $32,115,003. The Department MOE expenditures during this period of $38,072,519, which exceeded the MOE required amount by $5,957,519. Of the MOE expenditures incurred, $10,957,419 represented in-kind contributions from 15 community organizations. On an annual basis, each community organization completes a Temporary Assistance for Needy Families (TANF) MOE form to report expenses that qualify as TANF expenditures. The form requires a description of the program operations, what TANF purpose the program addresses, the number of families served, and the amount of eligible expenditures in total. The form is signed by the organization and submitted to the Department to serve as the supporting documentation for the in-kind contribution provided by the community organization. No additional documentation is provided by the community organization to support the amount of the expenditures included on the form. The Department does not perform procedures to ensure expenditures reported by the community organization are accurate and represent valid expenditures that were incurred to support the program outlined within the form and in turn to ensure the in-kind contribution used to support the required MOE is appropriate. Cause The cause of the condition found was a result of insufficient internal controls and procedures to ensure the expenditures reported by the community organizations are properly supported by valid expenditures that meet the criteria of qualified TANF expenditures. As the Department enters into a memorandum of understanding (MOU) with each community organization that outlines the types of costs that are allowable sources of MOE and obtains a signed certification from each organization as to the amount of expenditures incurred, the Department indicated that the support provided is sufficient and therefore does not validate the information for accuracy. Effect The effect of the condition found is that the Department may not meet the required annual MOE requirement as in-kind contributions may not be complete or represent qualified expenditures and does not have internal controls and procedures in place to identify noncompliance timely. Questioned Costs Not determinable. Recommendation We recommend that the Department implement internal controls and procedures to ensure that in-kind contributions used to support MOE are reviewed to ensure that the expenditures are accurate and meet the definition of qualifying expenditures. View of Responsible Officials We do not concur. The expenditures outlined are considered verifiable costs via the Memorandum of Understanding (MOU) and the Maintenance of Effort (MOE) forms completed by the third party agency. As part of the June 30, 2018 audit a similar finding is noted which we also did not concur with as part of that audit. The department has since been in contact and had meetings with the Federal Administration for Children and Families (ACF). In addition, a formal response was provided by ACF on August 31, 2022 that stated they are hoping to resolve this outstanding issue soon. We are currently awaiting the Federal Administration for Children and Families (ACF) decision concerning this finding and as such, we do not believe any corrective action is required. Anticipated Completion Date When the decision from ACF is given we will respond accordingly. Until then no corrective action is considered necessary. Contact Person: Mary Calise, Deputy Chief Financial Officer, Depart. of Health and Human Services Rejoinder The Department stated in their response that it verifies the completeness and accuracy of the third-party in-kind match through the MOU entered into and the MOE forms that the providers submit. Per review of the signed certifications (or the MOE forms), we noted the certification contains a description of the general purpose of the program, an identification of the TANF purpose the program addresses, the number of families/individuals served, the expenses incurred under the program, excluding any federal and state funds received. While we were provided with documentation to support that the third-party certifications were received, we were not provided with evidence to support the Department had performed additional procedures to verify the incurred costs were complete and accurate as required by 45 CFR section 263.2(e) and 75.306. We do not agree that a certification alone from a third party meets the definition of a verifiable cost from third -party records.
Finding Reference Number: 2022-023 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Federal Reporting Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Health and Human Services (the Department) passed through $3,307,974 in Temporary Assistance to Needy Families funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 6 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, to ensure timely and accurate FFATA reporting. The Department uses a matrix to assist in the submission of FFATA reports, however, this schedule is not maintained and is overridden each time a new report is filed, resulting in our inability to validate the amount of the award amount reported for reach report tested within our sample. Effect The effect of the condition found is that the Department did not have sufficient internal controls in accordance with 2 CFR section 200.303. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials The Department partially concurs as follows: The Department?s position is that it maintains compliance with the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The Department agrees that during the year ended June 30, 2022, not all of the tested FFATA reports were deemed complete and accurate due to internal control considerations. The Department will review current practices regarding the internal control of financial information included in the G&C PDF?s which are the basis of the FFATA reporting with the objective of accurately reporting the specific amounts of Federal Funding content by FAIN so as to facilitate the accurate and timely reporting of FFATA in accordance with the Act. Anticipated Completion Date: September 30, 2023 Contact Person: PJ Nadeau, Administrator
Finding Reference Number: 2022-024 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provisions: Penalty for Failure to Comply with Work Verification Plan Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-025 Statistically Valid Sample: No The State agency must maintain adequate documentation, verification, and internal control procedures to ensure the accuracy of the data used in calculating work participation rates. In so doing, it must have in place procedures to (a) determine whether its work activities may count for participation rate purposes; (b) determine how to count and verify reported hours of work; (c) identify who is a work eligible individual; and (d) control internal data transmission and accuracy. Each State agency must comply with its HHS-approved Work Verification Plan in effect for the period that is audited. HHS may penalize the State by an amount not less than one percent and not more than five percent of the SFAG for violation of this provision (42 USC 601, 602, 607, and 609); 45 CFR sections 261.60, 261.61, 261.62, 261.63, 261.64, and 261.65). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork related to compliance with the New Hampshire Department of Health and Human Services (the Department) work verification plan we noted the following: A. For 5 of 60 participants selected for testwork, the participant did not have a signed active employment plan for the period selected for testwork. As there was no active employment plan, we were unable to verify if the participant was in compliance with their required work requirements for the period tested. B. For 7 of 60 participants selected for testwork, there was insufficient documentation to support the number of hours worked within the New Heights system for the participant. Cause The cause of the condition found was a result of inadequate review internal controls in place to ensure that participants have an active signed employment plan in place, that sufficient documentation is maintained to support the number of work hours reported by participants, and that the hours worked is accurately reported within the New Heights system. Effect The effect of the condition found is that the State may not be in compliance with its work verification plan and would not be able to identify the noncompliance. Questioned Costs Not determinable. Recommendation We recommend that the Department enhance its existing internal controls and procedures to ensure that participant employment plans are obtained, documentation used to support participant work hours is maintained, that the hours reported agree to the documented hours worked and that the work hours are accurately reflected within the New Heights system. View of Responsible Officials We concur with the finding. Corrective Action: Condition A The Bureau of Employment Supports has been undergoing massive programmatic changes over the past 2 to 3 years. As part of those changes, there has been an updated Work Verification Plan submitted which will help to address some areas where errors have occurred. Keeping in mind that for a period of close to 2 years, due to the COVID pandemic, NHEP was not holding participants accountable for not returning signed employment plans to NHEP staff. The focus for that time was to ensure that families were housed, fed and safe, therefore, services focused on their immediate needs. Participants who entered the NHEP program during that time were not held accountable to returning a signed employment plan therefore it did not become part of their routine with NHEP. While COVID restrictions have been lifted, participants seem to have needed some time to reintegrate into the NHEP program and the mandatory expectations. NHEP staff and leadership will continue to remind participants and become more diligent in ensuring that signed employment plans are on the forefront of their daily responsibilities. It should be noted that in a couple of instances, employment plans were created as part of a Service Determination Appointment and very quickly after the participant was deemed exempt from the Work Program (NHEP) so the employment plan was not necessary and became a moot point. A Director?s Memo will be sent out by the end of this week which will allow Employment Plans to be acknowledged and accepted by the participant in multiple ways (not just with a wet signature) thereby increasing the likelihood of participants returning accepted employment plans to NHEP staff. Making this shift will mitigate the difficulties that are causing participants to not return their signed employment plans to NHEP staff and will decrease instances where there is not an accepted employment plan on file. NHEP leadership will hold a state wide mandatory staff training where ways to prioritize the monitoring and obtainment of accepted employment plans will be outlined and discussed. Field Support Managers will continue to monitor their staff on a quarterly basis, however, will add a monthly check on having accepted employment plans to their responsibilities. Condition B Part of the changes that NHEP has implemented have included a new Activity Tracking form which has made tracking hours more efficient and easier for the participant as well as the Employment Counselor. We believe that this activity tracker as well as the decrease in mandatory forms will allow for more accuracy and fewer errors moving forward. Uploading documents into the e-folder was found to be error prone, therefore, on March 1, 2023, NHEP leadership provided guidance and training on a specific process of indexing and scanning documents to ensure that moving forward the Employment Counselors are checking their e-folder?s to ensure that documents are properly uploaded and visible. This process was initially sent out to the field as a suggestion in 9/2022, however, on 3/1/23 this process was sent out as an expected process moving forward. Also, through cursory investigations, we believe that this new process, combined with the new Activity Tracking form, has already shown to be effective in improving the accuracy of supporting and recording hours. NHEP leadership has also been working with the NEW HEIGHTS system to streamline the process of uploading documents to further decrease the potential for errors. A change request form was submitted approximately one year ago. Also during the time period of this audit, NHEP was requiring pay stubs from employed participants and completing ?overrides? of the number of work hours that a participant worked during the week if that number was different than what was auto-populating based on information obtained by and entered by eligibility. NHEP discontinued that practice. NHEP no longer requires pay stubs from participants as that is a function of eligibility. NHEP utilizes the number of hours worked per week based on the number of hours entered by eligibility. This change will ensure that employment hour errors no longer occur. In order to address issues of audit findings, within the next 90 days, NHEP leadership is holding a state wide mandatory staff training where more in-depth information on the audit process will be shared including audit ?tests?, ?questions? and ?corrective action plans?. Historically in NH, the audit process was not shared with the NHEP staff making them unaware of the expectations and/or findings of the audit. NHEP staff were trained to complete certain processes and enter particular data but were never able to connect that back to anything. While we have been introducing this process more and more to our staff, we intend to hold a training to help them more thoroughly understand why they are doing what they are doing and remind them that what they do is reviewed for accuracy as part of the federal audit process. We believe that this transparency will create buy-in from the staff to put systems in place for themselves and to self-monitor more. Anticipated Completion Date: December 31, 2023 Contact: Brigitte Bowmar, Program and Workforce Administrator III
Finding Reference Number: 2022-002 NH Department of Administrative Services Federal Transit Cluster and COVID-19 Federal Transit Cluster (Assistance Listing #20.507and #20.526) Airport Improvement Program and COVID-19 Airport Improvement Program (Assistance Listing #20.106) COVID-19 Coronavirus State and Local Fiscal Recovery Funds (Assistance Listing #21.027) Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) and COVID-19 Epidemiology and Laboratory Capacity for Infectious Diseases (ELC) (Assistance Listing #93.323) Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers 2020G996115, 2021G996115, SLFRP0145, NUK50CK000522, 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4, 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2019, 2020, 2021 U.S. Department of Transportation, U.S. Department of Treasury, U.S. Department of Health and Human Services Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Title 2 U.S. Code of Federal Regulations Part 200 (2 CFR section 200), Uniform Administrative Requirements, Cost Principles, and Audit Requirements, section 200.510(b) states the auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended as determined in accordance with ? 200.502. While not required, the auditee may choose to provide information requested by Federal awarding agencies and pass-through entities to make the schedule easier to use. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The State of New Hampshire (the State) entered into contracts and subrecipient grant agreements to assist with the administration of its federal awards. As part of the Schedule of Expenditures of Federal Awards (SEFA) preparation process, the Department of Administrative Services requested information from each Department related to federal expenditures made by federal program and the portion of those expenditures that were passed through to subrecipients. For the year ended June 30, 2022, the State reported approximately $3.5 billion in federal expenditures on the SEFA. Of the total expenditures reported, approximately $783 million was reported as amounts passed through to subrecipients. During our audit, we identified several instances where the State inaccurately reported the value of the amounts passed through to subrecipients for certain federal programs. Specifically, we noted the following: A. Federal Transit Cluster - The State reported subrecipient expenditures in the amount of $4,038,163 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over procurement, we noted that 1 of 4 contracts selected for testwork was incorrectly identified as a contract. Upon further review and inquiry of management, the actual subrecipient expenditures for the year ended June 30, 2022 were $375,302, resulting in an overstatement of $3,662,861. This error was subsequently corrected on the final SEFA. B. Airport Improvement Program - The State reported subrecipient expenditures in the amount of $8,275,240 on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $8,168,301, resulting in an overstatement of $106,939. This error was subsequently corrected on the final SEFA. C. Coronavirus State and Local Fiscal Recovery Funds ? The State reported subrecipient expenditures in the amount of $7,435,217 on the draft SEFA within the amounts provided to subrecipients column. During our testwork over subrecipient monitoring, we noted that for 5 of 10 subrecipients selected for testwork that the sample selection had been incorrectly identified as a subrecipient, resulting in an overstatement of $5,326,620. We further noted as part of our testwork over procurement, that 18 of 48 contracts selected for testwork had incorrectly been identified as a contract and instead of a subrecipient grant agreement. There were no expenditures associated with these agreements, and as a result, there was no impact on the amount reported on the SEFA within the amounts provided to subrecipients column. The error was subsequently corrected on the final SEFA to properly present $2,108,597 as passed through to subrecipient. D. Epidemiology and Laboratory Capacity for Infectious Diseases - The State reported subrecipient expenditures in the amount of $4,879,473 on the draft SEFA within the amounts provided to subrecipients column. During our testwork related to FFATA reporting, we noted that 1 of 4 items selected for testwork did not represent a tier-one award but instead was a contract. The impact on the amount reported on the SEFA within the amounts provided to subrecipients column was an overstatement of $8,400. The error was subsequently corrected on the final SEFA to properly present $4,871,073 as passed through to subrecipient. E. Temporary Assistance for Needy Families - The State did not report any subrecipient expenditures on the draft SEFA within the amounts provided to subrecipients column. Upon further review and inquiry of management, management determined the actual subrecipient expenditures for the year ended June 30, 2022 were $3,307,974, resulting in an understatement of $3,307,974. This error was subsequently corrected on the final SEFA. Cause The cause of the condition found is primarily due to insufficient controls related to the determination of vendor versus subrecipient to ensure the proper identification of subrecipients. Effect The effect of the condition found is that subrecipient expenditures were not accurately presented on the SEFA. Questioned Costs None. Recommendation We recommend that the State review its existing statewide internal controls over vendor versus subrecipient determination to ensure they are operating effectively to properly identify a vendor versus a subrecipient. This will ensure that the amounts presented as pass through as subrecipient expenditures on the SEFA are complete and accurate. Views of Responsible Officials The Department of Administrative Services (DAS) concurs. Financial management of individual federal awards is decentralized throughout state agencies which centralizes annually in the culmination of the State?s SEFA. During this process, each agency is required to complete a standardized SEFA analysis and reconciliation tool for review by the DAS prior to the incorporation of the data into the State?s SEFA. This process also includes an annual Single Audit training and update session organized by the DAS. Additionally, the DAS notes all contracts, including subawards, entered by state agencies over a designated threshold are required to be authorized by the State?s Legislative Fiscal Committee and the Governor and Executive Council. The DAS will examine each of these processes to identify additional control activities to improve the accuracy and completeness of the pass through element of the SEFA. Anticipated Completion Date: April 30, 2024 Contact: Steven Giovinelli, Federal Grants and Cost Allocation Administrator, Department of Administrative Services
Finding Reference Number: 2022-020 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provisions: Child Support Non-Cooperation Type of Finding: Significant Deficiency Prior Year Finding: 2021-023 Statistically Valid Sample: No Criteria If the State agency responsible for administering the State plan under Title IV-D of the Social Security Act determines that an individual is not cooperating with the State in establishing paternity, or in establishing, modifying or enforcing a support order with respect to a child of the individual, and reports that information to the State agency responsible for TANF, the State TANF agency must (1) deduct an amount equal to not less than 25% from the TANF assistance that would otherwise be provided to the family of the individual and (20 may deny the family any TANF assistance. Health and Human Services (HHS) may penalize a State for up to 5% of the SFAG for failure to substantially comply with this required State child support program (45 CFR sections 264.30 and 264.31) Additionally, 45 CFR section 75 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition During our testwork over sanctions imposed for child support non-cooperation, we noted the following: A. For 1 of 9 cases selected for testwork, we noted that while the date of non-cooperation was September 14, 2021, the Department did not assess the required sanction for non-cooperation until the October 16, 2021 benefit payment period, resulting in the participant being overpaid approximately $222. B. As part of our testwork over sanctions imposed on single custodial parents of children under the age of 6, we noted that for 1 of 7 cases selected for testwork, the participant was not sanctioned due to inability to obtain childcare, but instead the case was sanctioned due to child support non-cooperation. Per review of the participant case file, the letter of non-cooperation required to establish the sanction was not maintained within the case file. As a result, it was unclear if the participant should have been sanctioned. Cause The cause of the condition found was a result of insufficient internal controls in place to ensure that required forms are obtained and maintained within the participant?s case file and to ensure that sanctions are applied timely and appropriately. Effect The effect of the condition found is that a breakdown in internal controls allowed for participant benefit payments to be inaccurate resulting in unallowable costs charged to the federal program or sanctions could have been imposed that were not appropriate. Questioned Costs $222 ? the overpayment in condition A above. Recommendation We recommend that the Department continue to enhance its existing internal controls and procedures to ensure the documentation used to support the beginning and termination of sanction periods is maintained and timely communicated so that sanctions are applied to participant benefit payments timely and appropriately. View of Responsible Officials Condition A We concur. The department received the notice of non-cooperation on 9/14/21 and did not enter the non-cooperation until 9/29/21, which was beyond the 10-day time frame. The case should have then been confirmed to impose the sanction on or before 9/24/21. This resulted in the client being over issued by approximately $222.37. Condition B We concur. The sanction for non-cooperation with Child Support was entered in error as Child Support did not issue a non-compliance. This resulted in the client being under issued by approximately $446.50 Follow-up We will be informing all supervisors of the specific errors found during the audit. We will also require supervisors to include these topics at their next staff meeting. In addition, individual emails will be sent to the staff involved with the errors and provide guidance. Anticipated Completion Date: N/A Contact Person: Karyl Provost
Finding Reference Number: 2022-021 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: NA Statistically Valid Sample: No Criteria5 A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 4. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Temporary Assistance for Needy Families program (TANF), the New Hampshire Department of Health and Human Services (the Department) enters into grant agreements with local entities to provide services to support eligible participants. During the year ended June 30, 2022, the Department passed through $3,307,974 to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following: A. For 1 of 7 subrecipients selected for testwork, per review of the grant agreement, we noted that the agreement did not contain any funding to be paid under the TANF program and should not have been identified as a TANF subrecipient. The total amount paid to the entity was $13,530. B. The Department communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for 4 of the remaining 6 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. The subrecipient?s unique identifier was not communicated for 1 of the remaining 6 subrecipients selected for testwork b. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) was not communicated for 2 of the remaining 6 subrecipients selected for testwork c. Identification of whether the award is R&D was not communicated for 4 of the remaining 6 subrecipients selected for testwork. C. The Department did not perform a risk assessment for all subrecipients selected for testwork. As a result, it is unclear if any additional targeted subrecipient monitoring should have been performed. D. For 1 of the remaining 6 subrecipients selected for testwork, there was no evidence that a programmatic monitoring review was completed for the subrecipient as required by their subrecipient monitoring policy. As there was no risk assessment performed for the subrecipient, it was unclear as to whether a programmatic monitoring visit should have been performed. Cause The cause of the condition found is primarily due to insufficient internal controls and procedures to ensure that federal reimbursement of expenditures are only disbursed to entities that have an approved subrecipient grant agreement. In addition, there are insufficient internal controls and procedures to ensure that award identification information is properly communicated with grant agreements and that risk assessments are performed to ensure sufficient during the awarded monitoring is performed over all subrecipients. Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a), section 200.332(b), CFR section 200.521 and 2 CFR sections 200.332(d) through (f). Questioned Costs $13,530 ? the amount in bullet A above. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that the Department complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b), 2 CFR sections 200.332(d) through (f), and 2 CFR section 200.251. This would include ensuring that: 1. The Department has an approved subrecipient grant agreement prior to making any disbursements to an entity; 2. All required award information is communicated to subrecipients; 3. A documented risk assessment is performed over all subrecipients, and the results of that risk assessment is used to evaluate the types of monitoring procedures that will be performed over the subrecipient; and 4. As a result of the risk assessment performed, monitoring activities are performed over subrecipients to ensure compliance with the terms and conditions of its subrecipient grant agreement. View of Responsible Officials A. We concur with this finding. The Department utilized an internally available copy of the Management Log, which lists vendor?s determinations. This is a copy of the log, not the original, official copy. There is a delay in updating this copy from the original, and incorrect information had been initially entered. The Department is moving this log to software which allows all Department employees to view the same log, while limiting the number of individuals who have access to make changes. Implementation has been completed as of March 2023. B. We concur with this finding. However, we believe this was an isolated incident as the TANF CFDA number (93.558) used was very similar to correct CFDA number (93.778) that should have been documented. C. 200.332 requirements a. We do not concur with this finding. The contract for Mt Prospect became effective 8/4/21, prior to the 4/22 inception of the UEI. The DUNS number, as in effect at that time, is noticed in Exhibit J of the contract. b. We concur with three of the four findings. Two of the four contracts pre-date the template update requiring the notice an indirect cost rate. Indirect cost rate for federal awards (including if the de minimis rate is charged per 2 CFR section 200.414) were added to Exhibit C of the Department?s contracts in April 2020. One of the contracts did not indicate an indirect cost rate as required. One of the contracts notes the indirect cost rate in the Notes of their financial details. c. One of the two contracts pre-dates the template update requiring the notice the identification of R&D. R&D identifications for federal awards were added to Exhibit C of the Department?s contracts in April 2020 One of the two contracts did not identify whether the contract was R&D as required. D. Subrecipient Risk Assessment ? We concur with the finding. We consider the finding to be fully resolved through Department policy Department policy and Department wide implementation. However, it should be noted full compliance will not be achieved for one to two contact cycles due to timing. The Department began addressing the issue of Subrecipient Monitoring issue in June 2017 when the first Grants Administrator was hired. The Department finalized the Subrecipient Monitoring Policy, which encompasses the financial and programmatic risk assessments as well as the subrecipient monitoring, on June 1, 2018. The Department provided user training on the subject in February and September 2018, training over one hundred forty-six staff. However, only brand new procurements utilized this policy during the initial roll out of this policy. The Department hired a new Grants Administrator in May 2019. The full Subrecipient Monitoring policy rolled out to all procurements, including sole source, amendments, and renewals, effective August 1, 2020. The Contracts Unit received specialized subrecipient monitoring training on May 13 and October 28, 2020. Department wide training to all staff occurred weekly between September 8 and November 3, 2020. The Grants Office provided additional targeted training to Program staff through team meetings. Over one hundred fifty Program and Finance staff received training. Annual training will be held in September each year. Refresher training or training for new staff is available upon request from the Grants Office. The Grants Office website offers Program, Finance, and Contracts Bureau staff access to the subrecipient monitoring policy, as well as training modules, slides, and tools. The training has also been recorded and is available on this site. The Subrecipient Monitoring Policy requires Program to determine whether any vendor which receives funds in exchange for goods or services is a Contractor or Subrecipient. Determined subrecipients receive a Management Questionnaire, which includes a ten question questionnaire and requirements for submitting financial data. This information is used to populate the Risk Assessment Tool, which shows any risks pertinent to a subrecipient and the subaward. Based on the risks shown, Program chooses monitoring activities to mitigate the risks and the Contracts Bureau memorializes these choices in the contract. The Grants Office continues to work closely with the Contracts Bureau to ensure compliance with the Subrecipient Monitoring policy. C. and D. It is also important to note that between April 2020 and June 2022 the Department was involved in the State?s strategic response to the COVID-19 pandemic. During this time, New Hampshire was under a state of emergency (Executive Order 2020-04), processes were rapidly converted to fully digital overnight, the State?s standard approval processes were suspended and non-standard templates, which did not include the required notifications under 200.332, were utilized to respond to the COVID-19 pandemic. The Department worked with other State Departments and the National Guard to create a record number of amendments, contracts, and other agreements (approximately 200% more than standard). The Department is in the process of instituting a new contract life cycle management solution that will utilize conditional logic to include the required notifications for agreements involving federal funds in order to ensure compliance. Implementation is anticipated to be complete in July 2023. As the COVID-19 pandemic strategic response has wound down, the Department has not suspended its regular standard approval or subrecipient risk assessment and monitoring processes and has not used non-standard templates to award federal funding. E. We concur there was no formal documentation of any monitoring activity. Due to staff turnover a new administrator has been hired and unable to furnish the monitoring that took place during FY22. However, a program site review during FY23 was performed and financial monitoring of invoices has also taken place. Anticipated Completion Date: July, 2023 Contact Person: Melissa Kelleher, Administrator Rejoinder As documented above in Bullet B of the condition found, the Department did not properly communicate all required award information to the subrecipient. Once aware of the noncompliance, the Department should have timely communicated this information to its subrecipients.
Finding Reference Number: 2022-022 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Matching, Level of Effort and Earmarking ? Maintenance of Effort Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-024 Statistically Valid Sample: No Criteria Every fiscal year, a State must maintain an amount of ?qualified state expenditures? (as defined in 42 US609(a)(7)(B) and 45 CFR section 263.2) for eligible families (as defined in 42 USC 609(a)(7)(B)(i)(IV) and 45 CFR section 263.2(b)) at least at the applicable percentage of the State?s historic State expenditures. Qualified expenditures with respect to eligible families may come from all programs. This requirement may be met through allowable state or local cash expenditures for goods and services, cash donations by non-governmental third parties, or the value of third-party in-kind contributions. A State?s records must show that all costs are verifiable and meet all applicable requirements in 45 CFR sections 263.2 through 263.6.45. Additionally, 45 CFR 75 section 303(a) states the non Federal entity must establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Condition For the federal fiscal year end September 30, 2021, the New Hampshire Department of Health and Human Services (the Department) was required to meet an annual maintenance of effort (MOE) requirement of $32,115,003. The Department MOE expenditures during this period of $38,072,519, which exceeded the MOE required amount by $5,957,519. Of the MOE expenditures incurred, $10,957,419 represented in-kind contributions from 15 community organizations. On an annual basis, each community organization completes a Temporary Assistance for Needy Families (TANF) MOE form to report expenses that qualify as TANF expenditures. The form requires a description of the program operations, what TANF purpose the program addresses, the number of families served, and the amount of eligible expenditures in total. The form is signed by the organization and submitted to the Department to serve as the supporting documentation for the in-kind contribution provided by the community organization. No additional documentation is provided by the community organization to support the amount of the expenditures included on the form. The Department does not perform procedures to ensure expenditures reported by the community organization are accurate and represent valid expenditures that were incurred to support the program outlined within the form and in turn to ensure the in-kind contribution used to support the required MOE is appropriate. Cause The cause of the condition found was a result of insufficient internal controls and procedures to ensure the expenditures reported by the community organizations are properly supported by valid expenditures that meet the criteria of qualified TANF expenditures. As the Department enters into a memorandum of understanding (MOU) with each community organization that outlines the types of costs that are allowable sources of MOE and obtains a signed certification from each organization as to the amount of expenditures incurred, the Department indicated that the support provided is sufficient and therefore does not validate the information for accuracy. Effect The effect of the condition found is that the Department may not meet the required annual MOE requirement as in-kind contributions may not be complete or represent qualified expenditures and does not have internal controls and procedures in place to identify noncompliance timely. Questioned Costs Not determinable. Recommendation We recommend that the Department implement internal controls and procedures to ensure that in-kind contributions used to support MOE are reviewed to ensure that the expenditures are accurate and meet the definition of qualifying expenditures. View of Responsible Officials We do not concur. The expenditures outlined are considered verifiable costs via the Memorandum of Understanding (MOU) and the Maintenance of Effort (MOE) forms completed by the third party agency. As part of the June 30, 2018 audit a similar finding is noted which we also did not concur with as part of that audit. The department has since been in contact and had meetings with the Federal Administration for Children and Families (ACF). In addition, a formal response was provided by ACF on August 31, 2022 that stated they are hoping to resolve this outstanding issue soon. We are currently awaiting the Federal Administration for Children and Families (ACF) decision concerning this finding and as such, we do not believe any corrective action is required. Anticipated Completion Date When the decision from ACF is given we will respond accordingly. Until then no corrective action is considered necessary. Contact Person: Mary Calise, Deputy Chief Financial Officer, Depart. of Health and Human Services Rejoinder The Department stated in their response that it verifies the completeness and accuracy of the third-party in-kind match through the MOU entered into and the MOE forms that the providers submit. Per review of the signed certifications (or the MOE forms), we noted the certification contains a description of the general purpose of the program, an identification of the TANF purpose the program addresses, the number of families/individuals served, the expenses incurred under the program, excluding any federal and state funds received. While we were provided with documentation to support that the third-party certifications were received, we were not provided with evidence to support the Department had performed additional procedures to verify the incurred costs were complete and accurate as required by 45 CFR section 263.2(e) and 75.306. We do not agree that a certification alone from a third party meets the definition of a verifiable cost from third -party records.
Finding Reference Number: 2022-023 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Federal Reporting Type of Finding: Significant Deficiency Prior Year Finding: None Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2022, we noted the New Hampshire Department of Health and Human Services (the Department) passed through $3,307,974 in Temporary Assistance to Needy Families funds to subrecipients. During out testwork over FFATA reporting at the Department, we selected 6 FFATA reports for testing and noted the following: See Schedule of Findings and Questioned Costs for Chart/Table Cause The cause of the condition found is due to a lack of policies and procedures, including internal controls, to ensure timely and accurate FFATA reporting. The Department uses a matrix to assist in the submission of FFATA reports, however, this schedule is not maintained and is overridden each time a new report is filed, resulting in our inability to validate the amount of the award amount reported for reach report tested within our sample. Effect The effect of the condition found is that the Department did not have sufficient internal controls in accordance with 2 CFR section 200.303. Questioned Costs None. Recommendation We recommend that the Department implement internal controls, policies, and procedures, across all Department programs to which FFATA reporting is applicable, to ensure timely and accurate reporting to the FSRS system to ensure compliance with the Transparency Act reporting requirements. View of Responsible Officials The Department partially concurs as follows: The Department?s position is that it maintains compliance with the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The Department agrees that during the year ended June 30, 2022, not all of the tested FFATA reports were deemed complete and accurate due to internal control considerations. The Department will review current practices regarding the internal control of financial information included in the G&C PDF?s which are the basis of the FFATA reporting with the objective of accurately reporting the specific amounts of Federal Funding content by FAIN so as to facilitate the accurate and timely reporting of FFATA in accordance with the Act. Anticipated Completion Date: September 30, 2023 Contact Person: PJ Nadeau, Administrator
Finding Reference Number: 2022-024 NH Department of Health and Human Services Temporary Assistance for Needy Families and COVID-19 Temporary Assistance for Needy Families (Assistance Listing #93.558) Federal Award Numbers: 2021G996115, 2021G990228, 2022G996115 Federal Award Year: 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provisions: Penalty for Failure to Comply with Work Verification Plan Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-025 Statistically Valid Sample: No The State agency must maintain adequate documentation, verification, and internal control procedures to ensure the accuracy of the data used in calculating work participation rates. In so doing, it must have in place procedures to (a) determine whether its work activities may count for participation rate purposes; (b) determine how to count and verify reported hours of work; (c) identify who is a work eligible individual; and (d) control internal data transmission and accuracy. Each State agency must comply with its HHS-approved Work Verification Plan in effect for the period that is audited. HHS may penalize the State by an amount not less than one percent and not more than five percent of the SFAG for violation of this provision (42 USC 601, 602, 607, and 609); 45 CFR sections 261.60, 261.61, 261.62, 261.63, 261.64, and 261.65). Additionally, per 2 CFR section 200.303, non-federal entities must establish and maintain effective internal control over federal awards that provide reasonable assurance that the non-federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork related to compliance with the New Hampshire Department of Health and Human Services (the Department) work verification plan we noted the following: A. For 5 of 60 participants selected for testwork, the participant did not have a signed active employment plan for the period selected for testwork. As there was no active employment plan, we were unable to verify if the participant was in compliance with their required work requirements for the period tested. B. For 7 of 60 participants selected for testwork, there was insufficient documentation to support the number of hours worked within the New Heights system for the participant. Cause The cause of the condition found was a result of inadequate review internal controls in place to ensure that participants have an active signed employment plan in place, that sufficient documentation is maintained to support the number of work hours reported by participants, and that the hours worked is accurately reported within the New Heights system. Effect The effect of the condition found is that the State may not be in compliance with its work verification plan and would not be able to identify the noncompliance. Questioned Costs Not determinable. Recommendation We recommend that the Department enhance its existing internal controls and procedures to ensure that participant employment plans are obtained, documentation used to support participant work hours is maintained, that the hours reported agree to the documented hours worked and that the work hours are accurately reflected within the New Heights system. View of Responsible Officials We concur with the finding. Corrective Action: Condition A The Bureau of Employment Supports has been undergoing massive programmatic changes over the past 2 to 3 years. As part of those changes, there has been an updated Work Verification Plan submitted which will help to address some areas where errors have occurred. Keeping in mind that for a period of close to 2 years, due to the COVID pandemic, NHEP was not holding participants accountable for not returning signed employment plans to NHEP staff. The focus for that time was to ensure that families were housed, fed and safe, therefore, services focused on their immediate needs. Participants who entered the NHEP program during that time were not held accountable to returning a signed employment plan therefore it did not become part of their routine with NHEP. While COVID restrictions have been lifted, participants seem to have needed some time to reintegrate into the NHEP program and the mandatory expectations. NHEP staff and leadership will continue to remind participants and become more diligent in ensuring that signed employment plans are on the forefront of their daily responsibilities. It should be noted that in a couple of instances, employment plans were created as part of a Service Determination Appointment and very quickly after the participant was deemed exempt from the Work Program (NHEP) so the employment plan was not necessary and became a moot point. A Director?s Memo will be sent out by the end of this week which will allow Employment Plans to be acknowledged and accepted by the participant in multiple ways (not just with a wet signature) thereby increasing the likelihood of participants returning accepted employment plans to NHEP staff. Making this shift will mitigate the difficulties that are causing participants to not return their signed employment plans to NHEP staff and will decrease instances where there is not an accepted employment plan on file. NHEP leadership will hold a state wide mandatory staff training where ways to prioritize the monitoring and obtainment of accepted employment plans will be outlined and discussed. Field Support Managers will continue to monitor their staff on a quarterly basis, however, will add a monthly check on having accepted employment plans to their responsibilities. Condition B Part of the changes that NHEP has implemented have included a new Activity Tracking form which has made tracking hours more efficient and easier for the participant as well as the Employment Counselor. We believe that this activity tracker as well as the decrease in mandatory forms will allow for more accuracy and fewer errors moving forward. Uploading documents into the e-folder was found to be error prone, therefore, on March 1, 2023, NHEP leadership provided guidance and training on a specific process of indexing and scanning documents to ensure that moving forward the Employment Counselors are checking their e-folder?s to ensure that documents are properly uploaded and visible. This process was initially sent out to the field as a suggestion in 9/2022, however, on 3/1/23 this process was sent out as an expected process moving forward. Also, through cursory investigations, we believe that this new process, combined with the new Activity Tracking form, has already shown to be effective in improving the accuracy of supporting and recording hours. NHEP leadership has also been working with the NEW HEIGHTS system to streamline the process of uploading documents to further decrease the potential for errors. A change request form was submitted approximately one year ago. Also during the time period of this audit, NHEP was requiring pay stubs from employed participants and completing ?overrides? of the number of work hours that a participant worked during the week if that number was different than what was auto-populating based on information obtained by and entered by eligibility. NHEP discontinued that practice. NHEP no longer requires pay stubs from participants as that is a function of eligibility. NHEP utilizes the number of hours worked per week based on the number of hours entered by eligibility. This change will ensure that employment hour errors no longer occur. In order to address issues of audit findings, within the next 90 days, NHEP leadership is holding a state wide mandatory staff training where more in-depth information on the audit process will be shared including audit ?tests?, ?questions? and ?corrective action plans?. Historically in NH, the audit process was not shared with the NHEP staff making them unaware of the expectations and/or findings of the audit. NHEP staff were trained to complete certain processes and enter particular data but were never able to connect that back to anything. While we have been introducing this process more and more to our staff, we intend to hold a training to help them more thoroughly understand why they are doing what they are doing and remind them that what they do is reviewed for accuracy as part of the federal audit process. We believe that this transparency will create buy-in from the staff to put systems in place for themselves and to self-monitor more. Anticipated Completion Date: December 31, 2023 Contact: Brigitte Bowmar, Program and Workforce Administrator III
Finding Reference Number: 2022-025 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-027 Statistically Valid Sample: No Criteria A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 4. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Low-Income Home Energy Assistance program (LIHEAP), the New Hampshire Department of Energy (the Department) enters into grant agreements with local entities to provide services related to the eligibility determination process for the LIHEAP program (including the calculation of participant benefits) and payment of benefits to fuel providers. During the year ended June 30, 2022, $37,990,873 was passed through to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following as of the year ending June 30, 2022: A. The Department communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for each of the 3 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. Federal Award Identification Number (FAIN) b. Federal award date c. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) d. Identification of whether the award is R&D B. The Department performed a risk assessment for each of the 3 subrecipients selected for testwork. As part of the risk assessment process, a score was given to each subrecipient with corresponded to a particular risk assessment, such as higher or average risk. The Department however does not have a formal risk assessment policy so it was unclear what additional monitoring procedures should have been performed for each subrecipient based upon their assigned risk. C. For 2 of 3 programmatic monitoring reviews selected for testwork, the Department did not tissue its programmatic monitoring reports to the subrecipient timely after the monitoring review was completed. As a result, there was a delay in the subrecipient implementing its corrective action plan to address the findings identified during the programmatic monitoring review. Specifically, we noted the following: a. For 1 of 2 programmatic monitoring reviews, the monitoring review took place on April 14, 2022, but the report to the subrecipient was not issued until September 2022. Per review of the report that was issued, there were findings identified by the Department that warranted corrective action. Due to the delay in issuing the report, a corrective action plan was not obtained from the subrecipient until 5 months after the date of that the monitoring review took place b. For 1 of 2 programmatic monitoring reviews, the monitoring review took place on April 12, 2022, but the report to the subrecipient was not issued until July 2022. Per review of the report that was issued, there were findings identified by the Department that warranted corrective action. Due to the delay in issuing the report, a corrective action plan was not obtained from the subrecipient until 3 months after the date that the monitoring review took place. D. For all 3 subrecipients selected for testwork, the Department did not complete its annual fiscal monitoring review during the audit period as required by their monitoring policy. E. During our testwork over the Department?s review of subrecipient uniform guidance reports, we noted the following: a. The Department does not track the receipt of uniform guidance reports. As a result, we were unable to determine when the uniform guidance reports were received by the Department to ensure they are reviewed timely. Specifically, we noted: i. For 1 of 3 subrecipients, the subrecipient?s uniform guidance appeared to have been reviewed, but as the Department does not track the receipt of uniform guidance reports, it was unclear if it was reviewed timely. We did note based on the date that the uniform guidance report was issued, the management decision letter was not issued within 6 months of the date of the report being issued as required by 2 CRF 200.521 (d). ii. For 2 of 3 subrecipients selected for testwork, we were unable to obtain evidence to support that the Department had obtained and reviewed the subrecipient?s uniform guidance report. F. The Annual Report on Households Assisted by LIHEAP contains data that is specific to benefits paid to eligible participants. The data that is used to compile the annual report is obtained from case data that is reported to the New Hampshire Department of Energy (the Department) from its subrecipients as the Department has entered into grant agreements with third parties who are responsible for the eligibility determination and benefit payment process. As part of our subrecipient monitoring testwork, we were unable to verify that the Department had performed any monitoring procedures over the data provided by each subrecipient to ensure that the data reported within the annual report was complete and accurate. Cause The cause of the condition found was primarily due to insufficient documented subrecipient policies and procedures to ensure that adequate monitoring is performed over subrecipients to align with the risk assessments performed. The monitoring procedures that are in place to not include the completeness and accuracy of the data submitted by the subrecipient utilized to compile federal reports. Further, the Department does not have sufficient internal controls and procedures to ensure results of monitoring visits are performed and results communicated timely to subrecipient or to ensure that subrecipient uniform guidance reports are obtained and reviewed timely. In addition, there are insufficient internal controls in place to review the grant agreements to ensure that all required data elements are communicated to the subrecipient in accordance with 2 CFR section 300.332(b). Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a), section 200.332(b) and 2 CFR section 200.521. Questioned Costs None. Recommendation We recommend that the Department formalize, policies and procedures and implement the necessary internal controls to ensure that the Department complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b) and 2 CFR section 200.251. This would include ensuring that: 1. All required award information is communicated to subrecipients; 2. A documented risk assessment is performed over all subrecipients and the results of that risk assessment is used to evaluate the types of monitoring procedures that will be performed over the subrecipient including the review of data utilized by the Department to compile federal reports; 3. As a result of the risk assessment performed, monitoring activities are performed over subrecipients to ensure compliance with the terms and conditions of its subrecipient grant agreement. The results of all monitoring reviews should be timely communicated in accordance with the Department?s policies to the subrecipient and actions requiring corrective action plan should be followed up on to ensure that the matter is resolved; and 4. Ensure that all uniform guidance reports are collected and reviewed timely so that a management decision letter can be issued within the time period required by federal regulations. View of Responsible Officials The Department of Energy recognizes the need to include all required information to be communicated to sub-recipients, and that all sub-recipients? risk assessments are thoroughly completed. In addition, uniform guidance reports need to be collected and reviewed to ensure that management letters be issued within the required timeframe. Anticipated Completion Date: Ongoing Contact Person Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-026 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-028, 2021-029 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The Low-Income Home Energy Assistance program (LIHEAP), Performance Data Form (OMB No. 0970-0106) is required to be submitted before January 1st indicating the amount expected to be carried forward for obligation in the following fiscal year and the planned use of those funds. LIHEAP Carryover and Reallotment Report (OMB No. 0970-0106) ? Grantees must submit this report no later than August 1 indicating the amount expected to be carried forward for obligation in the following fiscal year and the planned use of those funds. Funds in excess of the maximum carryover limit are subject to reallotment to other LIHEAP grantees in the following fiscal year and must also be reported (42 USC 8626). The SF-425, Federal Financial Report, is required to be filed annually. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over federal reporting as part of the Low-Income Home Energy Assistance program (LIHEAP), we noted the following: A. The New Hampshire Department of Energy (the Department) during the year ended June 30, 2022, $37,990,873 was passed through to subrecipients that met the requirements for first tier subawards under the Transparency Act and as such FFATA reports were required to be filed for each of those subawards. During the period ending June 30, 2022, the Department did not file the required FFATA reports. B. The annual LIHEAP Performance Data Form was not submitted by January 31, 2022. The Department contacted the regulator in May of 2022 requesting an extension which was approved, however as of the date of testwork in December 2022 the report still has not been submitted. C. Per review of the LIHEAP Carryover and Reallotment Report filed during our audit period, we noted that line 1.3 for the regular block grant carryover amount was $530,288, which was less than the maximum allowed carryover amount of $2,771,886. As part of our testwork, we were unable to obtain documentation to support that the amount reported on the federal report was accurate. Based on discussions with the Department, they indicated that the amount reported represented the unobligated balance as of June 30, 2021 as the federal report is due by August 1, 2021. However, we further noted that the unobligated balance for the federal grant as filed on its annual SF-425 report as of September 30, 2021 which would incorporate an additional 3 months of obligations, reported an unobligated balance of $979,648, which is greater than what was reported on the LIHEAP Carryover and Reallotment Report. D. 1 of 3 SF-425 federal reports selected for testwork that the New Hampshire Department of Energy (the Department) did not use the correct indirect cost rate when compiling the report. Instead of using a rate of 30.40%, the Department used a rate of 30.45%, resulting in indirect costs being over reported on the report by approximately $13. Cause The cause of the condition found was primarily due to insufficient resources within the Department to ensure the federal reports were filed or filed timely as well as insufficient policies and procedures to ensure that the documentation to support the amount reported on the LIHEAP Carryover and Reallotment Report. Based on inquiry with management, the Department at the time of the filing of the SF-425 report, the cognizant agency had not approved its proposed indirect cost rate so an older rate was used. The report was not subsequently revised once the rate was approved in April of 2022. Effect The effect of the condition found is that the Department did not file the required FFATA reports and the annual LIHEAP Performance Data Form and the LIHEAP Carryover and Reallotment Report and SF-425 reports may not have been filed accurately. Questioned Costs None. Recommendation We recommend that the Department should review to ensure there is sufficient safeguards in place for professionals to perform when positions are vacant so that necessary processes are completed related to compliance with federal requirements, including federal reporting requirements related to the timely submission of the annual LIHEAP Performance Report and the submission of FFATA reports for first-tier subawards. In addition, we recommend that the Department implement written policies and procedures for the compilation of the annual LIHEAP Carryover and Reallotment report and ensure that the documentation to support the amounts reported is maintained to support that the report is complete and accurate. Finally we recommend that the Department review its policies and procedures to ensure that the appropriate indirect cost rate is used within the SF-425 reports. View of Responsible Officials The Department of Energy recognizes the FFATA reporting requirement was not met due to insufficient resources in FY22 while completing an agency merger. The Department is adjusting our internal procedures and processes where necessary to address any and all deficiencies in our reporting requirements and we are currently training new staff on reporting regulations and processes. The corrective action to ensure that the annual Performance Report is filed timely is recognized. This was due to a lack of staffing to complete the report in a timely manner. A new associate position is being created and staffed at the NH Department of Energy to prevent this situation going forward. For the Carryover and Reallotment report, Additional support staff in both the Fiscal and Program offices for LIHEAP are being recruited and trained. This will ensure that adequate policies and procedures can be developed and implemented. For the SF-425 report, the Department of Energy disagrees with this finding. The expense was calculated at the agency?s calculated and submitted Indirect Cost Rate Proposal (30.45%) to our cognizant agency the US DHHS on December 30, 2020. Our proposal was not reviewed/approved by US DHHS until May 02, 2022 at the rate of 30.40%. Energy calculates and expenses indirect cost on a quarterly basis. At the time that the rate was calculated (after 9/30/2021) for FFY22 Q1, no response was received from US DHHS as to our proposal, therefore, per the recommendation of the Admin Services ? Comptroller?s office, the proposed rate of 30.45% was used to calculate the Indirect Cost expense for FFY22 Q1. The over reported charge was not due to ?insufficient review controls?. I did provide in our backup materials in PBC#38 the late response from US DHHS acknowledging the 30.4% rate to be approved and that acknowledgment is dated April 5, 2022 ? well beyond the time the expense was calculated for FFY22 Q1 expenses. Energy will continue to follow our established processes and procedures to ensure accurate federal grant expensing. Anticipated Completion Date: June 30, 2023 and September 30, 2023 for the Carryover and Reallotment Report Contact Person: Jane Lemire, Business Administrator (PT) and Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-027 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Cash Management Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria U.S. Department of the Treasury (Treasury) regulations at 31 CFR section 204 part 205 implement the Cash Management Act of 1990 (CMIA). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Catalog of Federal Domestic assistance that meet the funding threshold for a major federal program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1)). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over performed over cash management related to the Low-Income Home Energy Assistance program, we noted the following: A. Under the State of New Hampshire?s Cash Management Agreement (CMIA), direct expenditures are to be drawn using the actual draw ? monthly technique. Under this technique, the funds are to be requested monthly based on actual costs incurred during that 1-month period. The funding technique is interest neutral. During our testwork over the cash draw process, we noted the following: a. For 5 of 7 cash draws selected for testwork, the New Hampshire Department of Energy (the Department) did not draw funds timely resulting in the cash draw to be delinquent. Each of the 4 cash draw covered multiple months of activity. b. For 1 of 7 cash draws selected for testwork, the Department drew funds down in advance as the cash draw covered 27 days only for the month of March 2022. We further noted, that during the month of March 2022, the Department completed an additional cash draw that covered 3 days of activity. As the clearance pattern within the CMIA agreement is interest neutral, there was no interest impact because of the cash draws not being performed timely. B. The Department advances payments to subrecipients to ensure that they have sufficient cash on hand to pay for benefit payments. The Department passed through $37,990,873 to subrecipients during the year ended June 30, 2022. During our testwork over compliance with cash management, we noted that for 1 of 3 subrecipients selected for testwork, the Department provided an advance payment to the subrecipient for programmatic expense and the advanced funds were not fully used by the subrecipient for approximately 5 months. The Department?s normal disbursement cycle of every 30 days. As such, it does not appear that the Department sufficiently minimized the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes. In addition to the above, we noted that for the same subrecipient, the advance memo to authorize the advance payment was not signed by the Program and Fiscal Manager as required by the Department?s policies and procedures. Cause The cause of the condition found was primarily due to insufficient resources to monitor and track cash draws to ensure they are performed timely in accordance with the clearance patten established within the CMIA agreement and to ensure that subrecipients either utilize advance funds timely or effectively evaluate the amount of funds they need on hand at the time of the advance payment. Effect The effect of the condition found is that the Department did not comply with the provisions of the CMIA as it relates to the timing of cash draws. In addition, subrecipients had excess cash on hand as the Department did not minimize the time elapsing between the transfer of federal funds to the subrecipient and their disbursement of funds for program purposes. As such the Department was not in compliance with 2 CFR section 200.305(b)(1). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that all cash draws are performed timely and in accordance with the CMIA agreement. In addition, we recommend that the Department review its existing internal controls, policies and procedures relating to advancing funds to subrecipients to ensure that excess cash held by the subrecipients does not exceed 30 days. View of Responsible Officials Related to compliance with the CMIA, the Department of Energy acknowledges there were several instances where draws were not completed on a monthly basis for the prior month?s expenditures following the CMIA agreement in FY22. The Department of Energy has hired another staff person to complete business office grant-related tasks and will be reviewing and adjusting our policies and procedures if and where needed in the future. This staff person is still in training, therefore the completion date is not known at this time. Related to the timing of payments to subrecipients, due to staffing issues in both the Administrative and Fiscal offices, this recommendation is acknowledged and accepted. Support staff in both offices are being recruited and trained. This will ensure that adequate supervision and compliance of sub-recipient cash advances procedures are followed. Anticipated Completion Date: Ongoing Contact Person: Jane Lemire Business Administrator IV (PT) and Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-028 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2101NHLIE4 Federal Award Year: 2021 U.S. Department of Health and Human Services Compliance Requirement: Earmarking Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria No more than 10% of a state?s LIHEAP funds for a federal fiscal year may be used for planning and administrative costs, including both direct and indirect costs. This limitation applies, in the aggregate, to planning and administrative costs at both the state and subrecipient levels. This cap may not be exceeded by supplementing with other federal funds (42 USC 8624(b)(9)(A); 45 CFR section 96.88(a)). No more than 15 percent of the greater of the funds allotted or the funds available to the grantee for a federal fiscal year may be used for low-cost residential weatherization or other energy-related home repairs. The secretary may grant a waiver beginning April 1st, and the grantee may then spend up to 25 percent for residential weatherization or energy-related home repairs (42 USC 8624(k)). No more than 5 percent of the LIHEAP funds may be used to provide services that encourage and enable households to reduce their home energy needs and, thereby, the need for energy assistance. Such services may include needs assessments, counseling, and assistance with energy vendors (42 USC 8624(b)(16)). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition To ensure that the Department had met the required earmarking requirements related to administrative, weatherization and energy reduction service limitations, the New Hampshire Department of Energy (the Department) maintains a tracking sheet for each federal grant that tracks all expenditures by category. At the end of the grant period, the total expenditures are reconciled to the federal grant and costs incurred related to the earmarking requirements are calculated to ensure that the required limitations are not exceeded. During our testwork over earmarking, we noted that for 1 of 2 grants selected for testwork, the grant appeared to have meet the required earmarking requirements, however we were unable to test the completeness and accuracy of the underlying support. Further we were unable to reconcile the total expenditures contained within the underlying support to the final grant close out report (the SF-425) submitted for the grant. Cause The cause of the condition found is due to the Department is unable to submit a final close out report within the federal reporting portal as the portal does not contain an option to complete the required report. As a result, the last federal report filed for this grant was as of September 31, 2021, which was prior to the liquidation of all obligations under the grant. Effect The effect of the condition found is that the expenditures utilized to track compliance with the earmarking requirement may not reconcile to the final expenditures reported within the SF-425 resulting in noncompliance. Questioned Costs Not determinable. Recommendation We recommend that the Department continue to work with the federal government to ensure that all grants that are required to be closed out have a final SF-245 and that the final expenditures reported reconciles to the expenditures used to track the required earmarking requirements. View of Responsible Officials The Department of Energy is currently in contact and working with representatives from the US DHHS to resolve the fact that the SF-425 report is not available for updating at this time for grant #2001NHE5C3. It must be made available for updating within the HHS reporting site by DHHS in order for Grantees to edit and submit a report. Corrective Action We will continue to work with US DHHS for any grant awarded to us that has this same reporting issue in the future. Anticipated Completion Date: Ongoing Contact Person: Jane Lemire Business Administrator IV (PT)
Finding Reference Number: 2022-025 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-027 Statistically Valid Sample: No Criteria A pass-through entity must: 1. Clearly identify to the subrecipient required award information and applicable requirements described in 2 CFR section 200.332(a); 2. Evaluate each subrecipient?s risk of noncompliance for the purposes of determining the appropriate subrecipient monitoring related to the subaward (2 CFR section 300.332(b)); 3. Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, complies with the terms and conditions of the subaward, and achieves performance goals (2 CFR sections 200.332(d) through (f). In addition to procedures identified as necessary based upon the evaluation of subrecipient risk or specifically required through the terms and conditions of the award, subaward monitoring must include following up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and other means; and 4. Issuing a management decision for audit findings pertaining to federal award provided to the subrecipient from the subrecipient as required by 2 CFR section 200.521. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition As part of the Low-Income Home Energy Assistance program (LIHEAP), the New Hampshire Department of Energy (the Department) enters into grant agreements with local entities to provide services related to the eligibility determination process for the LIHEAP program (including the calculation of participant benefits) and payment of benefits to fuel providers. During the year ended June 30, 2022, $37,990,873 was passed through to subrecipients. As part of our testwork over the subrecipient monitoring process, we noted the following as of the year ending June 30, 2022: A. The Department communicates award information to subrecipients through the approved grant agreement. Per review of the grant agreement, for each of the 3 subrecipients selected for testwork, the Department did not communicate all the required award information as outlined in 2 CFR section 200.332. Specifically, the following elements were not communicated: a. Federal Award Identification Number (FAIN) b. Federal award date c. Indirect cost rate for federal awards (including if the deminimus rate is charged per 2 CFR section 200.414) d. Identification of whether the award is R&D B. The Department performed a risk assessment for each of the 3 subrecipients selected for testwork. As part of the risk assessment process, a score was given to each subrecipient with corresponded to a particular risk assessment, such as higher or average risk. The Department however does not have a formal risk assessment policy so it was unclear what additional monitoring procedures should have been performed for each subrecipient based upon their assigned risk. C. For 2 of 3 programmatic monitoring reviews selected for testwork, the Department did not tissue its programmatic monitoring reports to the subrecipient timely after the monitoring review was completed. As a result, there was a delay in the subrecipient implementing its corrective action plan to address the findings identified during the programmatic monitoring review. Specifically, we noted the following: a. For 1 of 2 programmatic monitoring reviews, the monitoring review took place on April 14, 2022, but the report to the subrecipient was not issued until September 2022. Per review of the report that was issued, there were findings identified by the Department that warranted corrective action. Due to the delay in issuing the report, a corrective action plan was not obtained from the subrecipient until 5 months after the date of that the monitoring review took place b. For 1 of 2 programmatic monitoring reviews, the monitoring review took place on April 12, 2022, but the report to the subrecipient was not issued until July 2022. Per review of the report that was issued, there were findings identified by the Department that warranted corrective action. Due to the delay in issuing the report, a corrective action plan was not obtained from the subrecipient until 3 months after the date that the monitoring review took place. D. For all 3 subrecipients selected for testwork, the Department did not complete its annual fiscal monitoring review during the audit period as required by their monitoring policy. E. During our testwork over the Department?s review of subrecipient uniform guidance reports, we noted the following: a. The Department does not track the receipt of uniform guidance reports. As a result, we were unable to determine when the uniform guidance reports were received by the Department to ensure they are reviewed timely. Specifically, we noted: i. For 1 of 3 subrecipients, the subrecipient?s uniform guidance appeared to have been reviewed, but as the Department does not track the receipt of uniform guidance reports, it was unclear if it was reviewed timely. We did note based on the date that the uniform guidance report was issued, the management decision letter was not issued within 6 months of the date of the report being issued as required by 2 CRF 200.521 (d). ii. For 2 of 3 subrecipients selected for testwork, we were unable to obtain evidence to support that the Department had obtained and reviewed the subrecipient?s uniform guidance report. F. The Annual Report on Households Assisted by LIHEAP contains data that is specific to benefits paid to eligible participants. The data that is used to compile the annual report is obtained from case data that is reported to the New Hampshire Department of Energy (the Department) from its subrecipients as the Department has entered into grant agreements with third parties who are responsible for the eligibility determination and benefit payment process. As part of our subrecipient monitoring testwork, we were unable to verify that the Department had performed any monitoring procedures over the data provided by each subrecipient to ensure that the data reported within the annual report was complete and accurate. Cause The cause of the condition found was primarily due to insufficient documented subrecipient policies and procedures to ensure that adequate monitoring is performed over subrecipients to align with the risk assessments performed. The monitoring procedures that are in place to not include the completeness and accuracy of the data submitted by the subrecipient utilized to compile federal reports. Further, the Department does not have sufficient internal controls and procedures to ensure results of monitoring visits are performed and results communicated timely to subrecipient or to ensure that subrecipient uniform guidance reports are obtained and reviewed timely. In addition, there are insufficient internal controls in place to review the grant agreements to ensure that all required data elements are communicated to the subrecipient in accordance with 2 CFR section 300.332(b). Effect The effect of the condition found is that the Department did not comply with 2 CFR section 200.332(a), section 200.332(b) and 2 CFR section 200.521. Questioned Costs None. Recommendation We recommend that the Department formalize, policies and procedures and implement the necessary internal controls to ensure that the Department complies with the provisions of 2 CFR section 200.332(a), 2 CFR section 200.332(b) and 2 CFR section 200.251. This would include ensuring that: 1. All required award information is communicated to subrecipients; 2. A documented risk assessment is performed over all subrecipients and the results of that risk assessment is used to evaluate the types of monitoring procedures that will be performed over the subrecipient including the review of data utilized by the Department to compile federal reports; 3. As a result of the risk assessment performed, monitoring activities are performed over subrecipients to ensure compliance with the terms and conditions of its subrecipient grant agreement. The results of all monitoring reviews should be timely communicated in accordance with the Department?s policies to the subrecipient and actions requiring corrective action plan should be followed up on to ensure that the matter is resolved; and 4. Ensure that all uniform guidance reports are collected and reviewed timely so that a management decision letter can be issued within the time period required by federal regulations. View of Responsible Officials The Department of Energy recognizes the need to include all required information to be communicated to sub-recipients, and that all sub-recipients? risk assessments are thoroughly completed. In addition, uniform guidance reports need to be collected and reviewed to ensure that management letters be issued within the required timeframe. Anticipated Completion Date: Ongoing Contact Person Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-026 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-028, 2021-029 Statistically Valid Sample: No Criteria Under the requirements of the Federal Funding Accountability and Transparency Act (FFATA) (Pub. L. No. 109-282), as amended by Section 6202 of Public Law 110-252, hereafter referred as the ?Transparency Act? that are codified in 2 CFR Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). The Low-Income Home Energy Assistance program (LIHEAP), Performance Data Form (OMB No. 0970-0106) is required to be submitted before January 1st indicating the amount expected to be carried forward for obligation in the following fiscal year and the planned use of those funds. LIHEAP Carryover and Reallotment Report (OMB No. 0970-0106) ? Grantees must submit this report no later than August 1 indicating the amount expected to be carried forward for obligation in the following fiscal year and the planned use of those funds. Funds in excess of the maximum carryover limit are subject to reallotment to other LIHEAP grantees in the following fiscal year and must also be reported (42 USC 8626). The SF-425, Federal Financial Report, is required to be filed annually. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over federal reporting as part of the Low-Income Home Energy Assistance program (LIHEAP), we noted the following: A. The New Hampshire Department of Energy (the Department) during the year ended June 30, 2022, $37,990,873 was passed through to subrecipients that met the requirements for first tier subawards under the Transparency Act and as such FFATA reports were required to be filed for each of those subawards. During the period ending June 30, 2022, the Department did not file the required FFATA reports. B. The annual LIHEAP Performance Data Form was not submitted by January 31, 2022. The Department contacted the regulator in May of 2022 requesting an extension which was approved, however as of the date of testwork in December 2022 the report still has not been submitted. C. Per review of the LIHEAP Carryover and Reallotment Report filed during our audit period, we noted that line 1.3 for the regular block grant carryover amount was $530,288, which was less than the maximum allowed carryover amount of $2,771,886. As part of our testwork, we were unable to obtain documentation to support that the amount reported on the federal report was accurate. Based on discussions with the Department, they indicated that the amount reported represented the unobligated balance as of June 30, 2021 as the federal report is due by August 1, 2021. However, we further noted that the unobligated balance for the federal grant as filed on its annual SF-425 report as of September 30, 2021 which would incorporate an additional 3 months of obligations, reported an unobligated balance of $979,648, which is greater than what was reported on the LIHEAP Carryover and Reallotment Report. D. 1 of 3 SF-425 federal reports selected for testwork that the New Hampshire Department of Energy (the Department) did not use the correct indirect cost rate when compiling the report. Instead of using a rate of 30.40%, the Department used a rate of 30.45%, resulting in indirect costs being over reported on the report by approximately $13. Cause The cause of the condition found was primarily due to insufficient resources within the Department to ensure the federal reports were filed or filed timely as well as insufficient policies and procedures to ensure that the documentation to support the amount reported on the LIHEAP Carryover and Reallotment Report. Based on inquiry with management, the Department at the time of the filing of the SF-425 report, the cognizant agency had not approved its proposed indirect cost rate so an older rate was used. The report was not subsequently revised once the rate was approved in April of 2022. Effect The effect of the condition found is that the Department did not file the required FFATA reports and the annual LIHEAP Performance Data Form and the LIHEAP Carryover and Reallotment Report and SF-425 reports may not have been filed accurately. Questioned Costs None. Recommendation We recommend that the Department should review to ensure there is sufficient safeguards in place for professionals to perform when positions are vacant so that necessary processes are completed related to compliance with federal requirements, including federal reporting requirements related to the timely submission of the annual LIHEAP Performance Report and the submission of FFATA reports for first-tier subawards. In addition, we recommend that the Department implement written policies and procedures for the compilation of the annual LIHEAP Carryover and Reallotment report and ensure that the documentation to support the amounts reported is maintained to support that the report is complete and accurate. Finally we recommend that the Department review its policies and procedures to ensure that the appropriate indirect cost rate is used within the SF-425 reports. View of Responsible Officials The Department of Energy recognizes the FFATA reporting requirement was not met due to insufficient resources in FY22 while completing an agency merger. The Department is adjusting our internal procedures and processes where necessary to address any and all deficiencies in our reporting requirements and we are currently training new staff on reporting regulations and processes. The corrective action to ensure that the annual Performance Report is filed timely is recognized. This was due to a lack of staffing to complete the report in a timely manner. A new associate position is being created and staffed at the NH Department of Energy to prevent this situation going forward. For the Carryover and Reallotment report, Additional support staff in both the Fiscal and Program offices for LIHEAP are being recruited and trained. This will ensure that adequate policies and procedures can be developed and implemented. For the SF-425 report, the Department of Energy disagrees with this finding. The expense was calculated at the agency?s calculated and submitted Indirect Cost Rate Proposal (30.45%) to our cognizant agency the US DHHS on December 30, 2020. Our proposal was not reviewed/approved by US DHHS until May 02, 2022 at the rate of 30.40%. Energy calculates and expenses indirect cost on a quarterly basis. At the time that the rate was calculated (after 9/30/2021) for FFY22 Q1, no response was received from US DHHS as to our proposal, therefore, per the recommendation of the Admin Services ? Comptroller?s office, the proposed rate of 30.45% was used to calculate the Indirect Cost expense for FFY22 Q1. The over reported charge was not due to ?insufficient review controls?. I did provide in our backup materials in PBC#38 the late response from US DHHS acknowledging the 30.4% rate to be approved and that acknowledgment is dated April 5, 2022 ? well beyond the time the expense was calculated for FFY22 Q1 expenses. Energy will continue to follow our established processes and procedures to ensure accurate federal grant expensing. Anticipated Completion Date: June 30, 2023 and September 30, 2023 for the Carryover and Reallotment Report Contact Person: Jane Lemire, Business Administrator (PT) and Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-027 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2001NHLEA, 2001NHLIE4, 2001NH5C3, 2101NHLIEA, 2101NHE5C6, 2201NHLIEA, 2101NHLIE4 Federal Award Year: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Cash Management Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria U.S. Department of the Treasury (Treasury) regulations at 31 CFR section 204 part 205 implement the Cash Management Act of 1990 (CMIA). Subpart A of those regulations requires state recipients to enter into Treasury-State Agreements that prescribe specific methods of drawing down federal funds (funding techniques) for federal programs listed in the Catalog of Federal Domestic assistance that meet the funding threshold for a major federal program under the CMIA. Treasury-State Agreements also specify the terms and conditions under which an interest liability would be incurred. Pass-through entities must monitor cash drawdowns by their subrecipients to ensure that the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes is minimized as required by the applicable cash management requirements in the federal award to the recipient (2 CFR section 200.305(b)(1)). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over performed over cash management related to the Low-Income Home Energy Assistance program, we noted the following: A. Under the State of New Hampshire?s Cash Management Agreement (CMIA), direct expenditures are to be drawn using the actual draw ? monthly technique. Under this technique, the funds are to be requested monthly based on actual costs incurred during that 1-month period. The funding technique is interest neutral. During our testwork over the cash draw process, we noted the following: a. For 5 of 7 cash draws selected for testwork, the New Hampshire Department of Energy (the Department) did not draw funds timely resulting in the cash draw to be delinquent. Each of the 4 cash draw covered multiple months of activity. b. For 1 of 7 cash draws selected for testwork, the Department drew funds down in advance as the cash draw covered 27 days only for the month of March 2022. We further noted, that during the month of March 2022, the Department completed an additional cash draw that covered 3 days of activity. As the clearance pattern within the CMIA agreement is interest neutral, there was no interest impact because of the cash draws not being performed timely. B. The Department advances payments to subrecipients to ensure that they have sufficient cash on hand to pay for benefit payments. The Department passed through $37,990,873 to subrecipients during the year ended June 30, 2022. During our testwork over compliance with cash management, we noted that for 1 of 3 subrecipients selected for testwork, the Department provided an advance payment to the subrecipient for programmatic expense and the advanced funds were not fully used by the subrecipient for approximately 5 months. The Department?s normal disbursement cycle of every 30 days. As such, it does not appear that the Department sufficiently minimized the time elapsing between the transfer of federal funds to the subrecipient and their disbursement for program purposes. In addition to the above, we noted that for the same subrecipient, the advance memo to authorize the advance payment was not signed by the Program and Fiscal Manager as required by the Department?s policies and procedures. Cause The cause of the condition found was primarily due to insufficient resources to monitor and track cash draws to ensure they are performed timely in accordance with the clearance patten established within the CMIA agreement and to ensure that subrecipients either utilize advance funds timely or effectively evaluate the amount of funds they need on hand at the time of the advance payment. Effect The effect of the condition found is that the Department did not comply with the provisions of the CMIA as it relates to the timing of cash draws. In addition, subrecipients had excess cash on hand as the Department did not minimize the time elapsing between the transfer of federal funds to the subrecipient and their disbursement of funds for program purposes. As such the Department was not in compliance with 2 CFR section 200.305(b)(1). Questioned Costs None. Recommendation We recommend that the Department review its existing internal controls, policies, and procedures to ensure that all cash draws are performed timely and in accordance with the CMIA agreement. In addition, we recommend that the Department review its existing internal controls, policies and procedures relating to advancing funds to subrecipients to ensure that excess cash held by the subrecipients does not exceed 30 days. View of Responsible Officials Related to compliance with the CMIA, the Department of Energy acknowledges there were several instances where draws were not completed on a monthly basis for the prior month?s expenditures following the CMIA agreement in FY22. The Department of Energy has hired another staff person to complete business office grant-related tasks and will be reviewing and adjusting our policies and procedures if and where needed in the future. This staff person is still in training, therefore the completion date is not known at this time. Related to the timing of payments to subrecipients, due to staffing issues in both the Administrative and Fiscal offices, this recommendation is acknowledged and accepted. Support staff in both offices are being recruited and trained. This will ensure that adequate supervision and compliance of sub-recipient cash advances procedures are followed. Anticipated Completion Date: Ongoing Contact Person: Jane Lemire Business Administrator IV (PT) and Eileen Smiglowski, NH LIHEAP Administrator
Finding Reference Number: 2022-028 NH Department of Energy Low Income Home Energy Assistance and COVID-19 Low Income Home Energy Assistance (Assistance Listing #93.568) Federal Award Numbers: 2101NHLIE4 Federal Award Year: 2021 U.S. Department of Health and Human Services Compliance Requirement: Earmarking Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria No more than 10% of a state?s LIHEAP funds for a federal fiscal year may be used for planning and administrative costs, including both direct and indirect costs. This limitation applies, in the aggregate, to planning and administrative costs at both the state and subrecipient levels. This cap may not be exceeded by supplementing with other federal funds (42 USC 8624(b)(9)(A); 45 CFR section 96.88(a)). No more than 15 percent of the greater of the funds allotted or the funds available to the grantee for a federal fiscal year may be used for low-cost residential weatherization or other energy-related home repairs. The secretary may grant a waiver beginning April 1st, and the grantee may then spend up to 25 percent for residential weatherization or energy-related home repairs (42 USC 8624(k)). No more than 5 percent of the LIHEAP funds may be used to provide services that encourage and enable households to reduce their home energy needs and, thereby, the need for energy assistance. Such services may include needs assessments, counseling, and assistance with energy vendors (42 USC 8624(b)(16)). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition To ensure that the Department had met the required earmarking requirements related to administrative, weatherization and energy reduction service limitations, the New Hampshire Department of Energy (the Department) maintains a tracking sheet for each federal grant that tracks all expenditures by category. At the end of the grant period, the total expenditures are reconciled to the federal grant and costs incurred related to the earmarking requirements are calculated to ensure that the required limitations are not exceeded. During our testwork over earmarking, we noted that for 1 of 2 grants selected for testwork, the grant appeared to have meet the required earmarking requirements, however we were unable to test the completeness and accuracy of the underlying support. Further we were unable to reconcile the total expenditures contained within the underlying support to the final grant close out report (the SF-425) submitted for the grant. Cause The cause of the condition found is due to the Department is unable to submit a final close out report within the federal reporting portal as the portal does not contain an option to complete the required report. As a result, the last federal report filed for this grant was as of September 31, 2021, which was prior to the liquidation of all obligations under the grant. Effect The effect of the condition found is that the expenditures utilized to track compliance with the earmarking requirement may not reconcile to the final expenditures reported within the SF-425 resulting in noncompliance. Questioned Costs Not determinable. Recommendation We recommend that the Department continue to work with the federal government to ensure that all grants that are required to be closed out have a final SF-245 and that the final expenditures reported reconciles to the expenditures used to track the required earmarking requirements. View of Responsible Officials The Department of Energy is currently in contact and working with representatives from the US DHHS to resolve the fact that the SF-425 report is not available for updating at this time for grant #2001NHE5C3. It must be made available for updating within the HHS reporting site by DHHS in order for Grantees to edit and submit a report. Corrective Action We will continue to work with US DHHS for any grant awarded to us that has this same reporting issue in the future. Anticipated Completion Date: Ongoing Contact Person: Jane Lemire Business Administrator IV (PT)
Finding Reference Number: 2022-029 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Provider Eligibility (Screening and Enrollment) Type of Finding: Significant Deficiency Prior Year Finding: 2021-034 Statistically Valid Sample: No Criteria In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR sections 431.107 and 447.10; and Section 1902(a)(9) of the Social Security Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The Department assigns risks to each provider based on their provider type. All new provider enrollments and moderate and high-risk revalidations are reviewed and approved by the Department of Health and Human Services (the Department). However, for limited risk revalidations, the Department has outsourced this service to the Department?s Medicaid Management Information System fiscal agent (Fiscal Agent). The Department holds at least bi-weekly meetings with the fiscal agent to discuss issues noted with enrollment, revalidation, trends noted, etc. In addition, the Department has hired the Fiscal Agent to perform a quality assurance review over all new provider and revalidations prior to the notification that they are an eligible provider for State of New Hampshire services to address the accuracy of enrollment. The Department does not currently have a completeness process to ensure the Fiscal Agent reviews all providers for revalidations timely. Specifically, during our testwork over provider eligibility, we noted: 1. For 5 of 65 providers, there was greater than five years, from five to sixteen years, between the Department revalidating the providers eligibility. These providers were due for revalidation prior to the start of the COVID-19 pandemic. All five providers were determined to be eligible upon review of these long outstanding providers. 2. For 1 of 65 providers, the identified providers were enrolled via roster and the Department maintained an attestation that is uploaded with the enrollment with the provider facility. We viewed the attestation from the provider facility, and noted it was uploaded to the MMIS during the audit period but signed in 2012. The agreement should be more current than 2012. We noted the Department did obtain an updated agreement in August of 2022. Cause The Department has internal controls to address accuracy but not completeness which would identify providers that are due revalidation. Effect The effect of the condition found is that the Department does not revalidate providers timely and obtaining all relevant supporting documentation which could lead to ineligible providers billing for Medicaid services. Questioned Costs None. Recommendation We recommend the Department implement monitoring and communication internal controls to continually assess the need for provider revalidation to ensure that it is executed timely and in accordance with the requirements, including a plan to ensure all reviews are performed timely and include obtaining all relevant information. View of Responsible Officials 1. We concur. The Provider enrollment unit (PEU) is currently working on revalidations not completed and have a plan to deposition those providers while ensuring minimal disruption to member services and protecting limited provider networks disciplines such as the mental health network. I, the PEU administrator have been conducting biweekly meetings with Conduent and our business systems analyst to develop a plan and a systematic approach to revalidate all providers in the future. I am currently drafting a policy and procedure memo that will outline the new process for revalidations so that revalidations will be timely and complete in the future. Once the new process is implemented, I intend to review revalidations with Conduent at our biweekly provider enrollment meetings to ensure the revalidation process is conducted in a timely fashion and the implemented process for revalidations is working in that all revalidations are performed timely. As for the past due revalidations, the PEU anticipates all past due provider revalidations, prior to the PHE, to be either completed or be terminated by the beginning of March 2023. 2. We partially agree. The attestation signed in 2012 does not have an expiration and there is no Federal regulation or State law that requires this to be renewed, however, based on the finding last year, the Office of Medicaid Services did a new attestation in 2022. The 2022 attestation also does not have an end date and is not required to be renewed at any time. The attestation ends when the agreement is terminated by either parties. Anticipated Completion Date: March 2023 Contact Person: Stephanie Aulis
Finding Reference Number: 2022-030 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Medicaid National Correct Coding Initiative Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-035 Statistically Valid Sample: No Criteria In accordance with Section 1903(r) of the Social Security Act, effective October 1, 2010, SMAs were required to incorporate NCCI methodologies into the state Medicaid programs pursuant to the requirements of Section 6507 of the Affordable Care Act. In paying applicable Medicaid claims, states? MES are required to completely and correctly implement the following six Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed. a. NCCI Procedure-to-Procedure (PTP) edits for practitioner and ambulatory surgical center (ASC) claims. b. NCCI PTP edits for outpatient hospital services, including emergency department, observation care, and outpatient hospital laboratory services. c. Medically Unlikely Edit (MUE) units of service (UOS) edits for practitioner and ASC services. d. MUE UOS edits for outpatient hospital services including emergency department, observation care, and outpatient hospital laboratory services. e. MUE UOS edits for durable medical equipment (DME) billed by providers. f. NCCI PTP edits for durable medical equipment (added in October 2012). States are also required to use: ? all four components of each Medicaid NCCI methodology; ? the most recent quarterly Medicaid NCCI edit files for states; ? the Medicaid NCCI edits in effect for the date of service on the claim line or claim; ? the claim-adjudication rules in the Medicaid NCCI methodologies; and ? all modifiers for Healthcare Common Procedure Coding System (HCPCS) codes and Current Procedural Terminology (CPT) codes needed for the correct adjudication of applicable Medicaid claims. The NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual contain additional requirements for implementation of the NCCI methodologies. The Medicaid NCCI methodologies must be applied to Medicaid fee-for-service claims submitted with, and reimbursed on the basis of, HCPCS codes and CPT codes. This includes claims reimbursed on a fee-for-service basis in state Medicaid Primary Care Case Management managed care programs. Application of NCCI methodologies to fee-for-service claims processed by other entities, including limited benefit plans or Managed Care Organizations, is not required; however, if SMAs require the application of NCCI methodologies to fee-for-service claims processed by such entities, then such entities must meet NCCI program requirements, including compliance with the NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition Per the Department of Health and Human Services (the Department), the edits required by the above CMS criteria reside in the Medicaid Management Information System (MMIS) and are activated based on responses sent back to MMIS from Cotiviti, a third-party vendor. MMIS is managed by Conduent. Conduent has a SOC1 report prepared to report on the fairness of the presentation of management?s description of the service organization?s system and the suitability of the design of the controls to achieve the related control objectives included in the description as of a specified date. The Conduent SOC1 report for the period July 1, 2021, to June 30, 2022, provided a brief description in the report of the NCCI process with Cotiviti and the related NCCI edits within MMIS, and management indicated that the NCCI edits were included in the control objective testing within the SOC report. However, the NCCI edits were not included in the Change Management population testing and as such, we were unable to rely on the NCCI edits. Based on this, there was no ability for us to validate in accordance with the criteria noted above the NCCI process as the control environment and control objectives were not identified in the SOC report and were not included within all relevant GITC populations. Cause The cause of the condition found was primarily due to the Departments on-going efforts with Conduent and their SOC auditor to ensure the documentation needed to support the testing of the automatic MMIS NCCI edits are contained and clearly documented within the SOC1 report and ensuring the edits were appropriately included in all testing. Effect The six required Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed may not be completely and correctly implemented by the Department?s third-party service organization. Questioned Costs Not determinable. Recommendation We recommend the Department works with the service organization to identify the automated NCCI edit checks and supporting general IT controls to be covered within the SOC 1 report so that it meets federal guidelines for compliance. View of Responsible Officials We concur and have developed a corrective action plan in conjunction with Conduent. See attached plan. The SOC report will include auditing the change management of the quarterly NCCI edit checks. The auditing firm will also update the control objective 5 activities to include a population of claims specifically with NCCI edits. Anticipated Completion Date: The completed 6/30/2023 SOC report. Contact Person: Roger Boissonneau, MMIS Director
Finding Reference Number: 2022-031 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Managed Care Financial Audit Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria Effective no later than for rating periods for contracts starting on or after July 1, 2017, the state must periodically, but no less frequently than once every three years, conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of each MCO, PIHP, and PAHP and post the results of these audits on its website (42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2021, we noted the Department of Health and Human Services (the Department) was in the request for proposal (RFP) process for a vendor to perform the required periodic audits, for the year-ended June 30, 2020, which is within the 3-year cycle, which was to be completed during the year ended June 30, 2021. However, during our year ended June 30, 2022, federal single audit we noted the RFP process was not completed and the required periodic audit had not been conducted. Cause The Department was unable to complete the process to engage a vendor to ensure periodic audits were performed and posted on the State's website. Effect The Department is not in compliance with the requirements of 42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920. Questioned Costs None. Recommendation We recommend the Department complete the RFP process to select a vendor to perform the required periodic audits for the period ended June 30, 2020, and going forward as required by the regulations. View of Responsible Officials We concur. The Department has contracted with Myers & Stauffer (M&S) to conduct the periodic audits of all three of its Managed Care plans for State Plan Rate Year 2020. We anticipate the audits will be completed by August 2023. Anticipated Completion Date: September 2023 Contact Person: Shirley Iacopino
Finding Reference Number: 2022-029 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Provider Eligibility (Screening and Enrollment) Type of Finding: Significant Deficiency Prior Year Finding: 2021-034 Statistically Valid Sample: No Criteria In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR sections 431.107 and 447.10; and Section 1902(a)(9) of the Social Security Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The Department assigns risks to each provider based on their provider type. All new provider enrollments and moderate and high-risk revalidations are reviewed and approved by the Department of Health and Human Services (the Department). However, for limited risk revalidations, the Department has outsourced this service to the Department?s Medicaid Management Information System fiscal agent (Fiscal Agent). The Department holds at least bi-weekly meetings with the fiscal agent to discuss issues noted with enrollment, revalidation, trends noted, etc. In addition, the Department has hired the Fiscal Agent to perform a quality assurance review over all new provider and revalidations prior to the notification that they are an eligible provider for State of New Hampshire services to address the accuracy of enrollment. The Department does not currently have a completeness process to ensure the Fiscal Agent reviews all providers for revalidations timely. Specifically, during our testwork over provider eligibility, we noted: 1. For 5 of 65 providers, there was greater than five years, from five to sixteen years, between the Department revalidating the providers eligibility. These providers were due for revalidation prior to the start of the COVID-19 pandemic. All five providers were determined to be eligible upon review of these long outstanding providers. 2. For 1 of 65 providers, the identified providers were enrolled via roster and the Department maintained an attestation that is uploaded with the enrollment with the provider facility. We viewed the attestation from the provider facility, and noted it was uploaded to the MMIS during the audit period but signed in 2012. The agreement should be more current than 2012. We noted the Department did obtain an updated agreement in August of 2022. Cause The Department has internal controls to address accuracy but not completeness which would identify providers that are due revalidation. Effect The effect of the condition found is that the Department does not revalidate providers timely and obtaining all relevant supporting documentation which could lead to ineligible providers billing for Medicaid services. Questioned Costs None. Recommendation We recommend the Department implement monitoring and communication internal controls to continually assess the need for provider revalidation to ensure that it is executed timely and in accordance with the requirements, including a plan to ensure all reviews are performed timely and include obtaining all relevant information. View of Responsible Officials 1. We concur. The Provider enrollment unit (PEU) is currently working on revalidations not completed and have a plan to deposition those providers while ensuring minimal disruption to member services and protecting limited provider networks disciplines such as the mental health network. I, the PEU administrator have been conducting biweekly meetings with Conduent and our business systems analyst to develop a plan and a systematic approach to revalidate all providers in the future. I am currently drafting a policy and procedure memo that will outline the new process for revalidations so that revalidations will be timely and complete in the future. Once the new process is implemented, I intend to review revalidations with Conduent at our biweekly provider enrollment meetings to ensure the revalidation process is conducted in a timely fashion and the implemented process for revalidations is working in that all revalidations are performed timely. As for the past due revalidations, the PEU anticipates all past due provider revalidations, prior to the PHE, to be either completed or be terminated by the beginning of March 2023. 2. We partially agree. The attestation signed in 2012 does not have an expiration and there is no Federal regulation or State law that requires this to be renewed, however, based on the finding last year, the Office of Medicaid Services did a new attestation in 2022. The 2022 attestation also does not have an end date and is not required to be renewed at any time. The attestation ends when the agreement is terminated by either parties. Anticipated Completion Date: March 2023 Contact Person: Stephanie Aulis
Finding Reference Number: 2022-030 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Medicaid National Correct Coding Initiative Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-035 Statistically Valid Sample: No Criteria In accordance with Section 1903(r) of the Social Security Act, effective October 1, 2010, SMAs were required to incorporate NCCI methodologies into the state Medicaid programs pursuant to the requirements of Section 6507 of the Affordable Care Act. In paying applicable Medicaid claims, states? MES are required to completely and correctly implement the following six Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed. a. NCCI Procedure-to-Procedure (PTP) edits for practitioner and ambulatory surgical center (ASC) claims. b. NCCI PTP edits for outpatient hospital services, including emergency department, observation care, and outpatient hospital laboratory services. c. Medically Unlikely Edit (MUE) units of service (UOS) edits for practitioner and ASC services. d. MUE UOS edits for outpatient hospital services including emergency department, observation care, and outpatient hospital laboratory services. e. MUE UOS edits for durable medical equipment (DME) billed by providers. f. NCCI PTP edits for durable medical equipment (added in October 2012). States are also required to use: ? all four components of each Medicaid NCCI methodology; ? the most recent quarterly Medicaid NCCI edit files for states; ? the Medicaid NCCI edits in effect for the date of service on the claim line or claim; ? the claim-adjudication rules in the Medicaid NCCI methodologies; and ? all modifiers for Healthcare Common Procedure Coding System (HCPCS) codes and Current Procedural Terminology (CPT) codes needed for the correct adjudication of applicable Medicaid claims. The NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual contain additional requirements for implementation of the NCCI methodologies. The Medicaid NCCI methodologies must be applied to Medicaid fee-for-service claims submitted with, and reimbursed on the basis of, HCPCS codes and CPT codes. This includes claims reimbursed on a fee-for-service basis in state Medicaid Primary Care Case Management managed care programs. Application of NCCI methodologies to fee-for-service claims processed by other entities, including limited benefit plans or Managed Care Organizations, is not required; however, if SMAs require the application of NCCI methodologies to fee-for-service claims processed by such entities, then such entities must meet NCCI program requirements, including compliance with the NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition Per the Department of Health and Human Services (the Department), the edits required by the above CMS criteria reside in the Medicaid Management Information System (MMIS) and are activated based on responses sent back to MMIS from Cotiviti, a third-party vendor. MMIS is managed by Conduent. Conduent has a SOC1 report prepared to report on the fairness of the presentation of management?s description of the service organization?s system and the suitability of the design of the controls to achieve the related control objectives included in the description as of a specified date. The Conduent SOC1 report for the period July 1, 2021, to June 30, 2022, provided a brief description in the report of the NCCI process with Cotiviti and the related NCCI edits within MMIS, and management indicated that the NCCI edits were included in the control objective testing within the SOC report. However, the NCCI edits were not included in the Change Management population testing and as such, we were unable to rely on the NCCI edits. Based on this, there was no ability for us to validate in accordance with the criteria noted above the NCCI process as the control environment and control objectives were not identified in the SOC report and were not included within all relevant GITC populations. Cause The cause of the condition found was primarily due to the Departments on-going efforts with Conduent and their SOC auditor to ensure the documentation needed to support the testing of the automatic MMIS NCCI edits are contained and clearly documented within the SOC1 report and ensuring the edits were appropriately included in all testing. Effect The six required Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed may not be completely and correctly implemented by the Department?s third-party service organization. Questioned Costs Not determinable. Recommendation We recommend the Department works with the service organization to identify the automated NCCI edit checks and supporting general IT controls to be covered within the SOC 1 report so that it meets federal guidelines for compliance. View of Responsible Officials We concur and have developed a corrective action plan in conjunction with Conduent. See attached plan. The SOC report will include auditing the change management of the quarterly NCCI edit checks. The auditing firm will also update the control objective 5 activities to include a population of claims specifically with NCCI edits. Anticipated Completion Date: The completed 6/30/2023 SOC report. Contact Person: Roger Boissonneau, MMIS Director
Finding Reference Number: 2022-031 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Managed Care Financial Audit Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria Effective no later than for rating periods for contracts starting on or after July 1, 2017, the state must periodically, but no less frequently than once every three years, conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of each MCO, PIHP, and PAHP and post the results of these audits on its website (42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2021, we noted the Department of Health and Human Services (the Department) was in the request for proposal (RFP) process for a vendor to perform the required periodic audits, for the year-ended June 30, 2020, which is within the 3-year cycle, which was to be completed during the year ended June 30, 2021. However, during our year ended June 30, 2022, federal single audit we noted the RFP process was not completed and the required periodic audit had not been conducted. Cause The Department was unable to complete the process to engage a vendor to ensure periodic audits were performed and posted on the State's website. Effect The Department is not in compliance with the requirements of 42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920. Questioned Costs None. Recommendation We recommend the Department complete the RFP process to select a vendor to perform the required periodic audits for the period ended June 30, 2020, and going forward as required by the regulations. View of Responsible Officials We concur. The Department has contracted with Myers & Stauffer (M&S) to conduct the periodic audits of all three of its Managed Care plans for State Plan Rate Year 2020. We anticipate the audits will be completed by August 2023. Anticipated Completion Date: September 2023 Contact Person: Shirley Iacopino
Finding Reference Number: 2022-029 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Provider Eligibility (Screening and Enrollment) Type of Finding: Significant Deficiency Prior Year Finding: 2021-034 Statistically Valid Sample: No Criteria In order to receive Medicaid payments, providers must: (1) be licensed in accordance with federal, state, and local laws and regulations to participate in the Medicaid program (42 CFR sections 431.107 and 447.10; and Section 1902(a)(9) of the Social Security Act (42 USC 1396a(a)(9)); (2) screened and enrolled in accordance with 42 CFR Part 455, Subpart E (sections 455.400 through 455.470); and make certain disclosures to the state (42 CFR Part 455, Subpart B, sections 455.100 through 455.106). Medicaid managed care network providers are subject to the same disclosure, screening, enrollment, and termination requirements that apply to Medicaid fee-for-service providers in accordance with 42 CFR Part 438, Subpart H. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition The Department assigns risks to each provider based on their provider type. All new provider enrollments and moderate and high-risk revalidations are reviewed and approved by the Department of Health and Human Services (the Department). However, for limited risk revalidations, the Department has outsourced this service to the Department?s Medicaid Management Information System fiscal agent (Fiscal Agent). The Department holds at least bi-weekly meetings with the fiscal agent to discuss issues noted with enrollment, revalidation, trends noted, etc. In addition, the Department has hired the Fiscal Agent to perform a quality assurance review over all new provider and revalidations prior to the notification that they are an eligible provider for State of New Hampshire services to address the accuracy of enrollment. The Department does not currently have a completeness process to ensure the Fiscal Agent reviews all providers for revalidations timely. Specifically, during our testwork over provider eligibility, we noted: 1. For 5 of 65 providers, there was greater than five years, from five to sixteen years, between the Department revalidating the providers eligibility. These providers were due for revalidation prior to the start of the COVID-19 pandemic. All five providers were determined to be eligible upon review of these long outstanding providers. 2. For 1 of 65 providers, the identified providers were enrolled via roster and the Department maintained an attestation that is uploaded with the enrollment with the provider facility. We viewed the attestation from the provider facility, and noted it was uploaded to the MMIS during the audit period but signed in 2012. The agreement should be more current than 2012. We noted the Department did obtain an updated agreement in August of 2022. Cause The Department has internal controls to address accuracy but not completeness which would identify providers that are due revalidation. Effect The effect of the condition found is that the Department does not revalidate providers timely and obtaining all relevant supporting documentation which could lead to ineligible providers billing for Medicaid services. Questioned Costs None. Recommendation We recommend the Department implement monitoring and communication internal controls to continually assess the need for provider revalidation to ensure that it is executed timely and in accordance with the requirements, including a plan to ensure all reviews are performed timely and include obtaining all relevant information. View of Responsible Officials 1. We concur. The Provider enrollment unit (PEU) is currently working on revalidations not completed and have a plan to deposition those providers while ensuring minimal disruption to member services and protecting limited provider networks disciplines such as the mental health network. I, the PEU administrator have been conducting biweekly meetings with Conduent and our business systems analyst to develop a plan and a systematic approach to revalidate all providers in the future. I am currently drafting a policy and procedure memo that will outline the new process for revalidations so that revalidations will be timely and complete in the future. Once the new process is implemented, I intend to review revalidations with Conduent at our biweekly provider enrollment meetings to ensure the revalidation process is conducted in a timely fashion and the implemented process for revalidations is working in that all revalidations are performed timely. As for the past due revalidations, the PEU anticipates all past due provider revalidations, prior to the PHE, to be either completed or be terminated by the beginning of March 2023. 2. We partially agree. The attestation signed in 2012 does not have an expiration and there is no Federal regulation or State law that requires this to be renewed, however, based on the finding last year, the Office of Medicaid Services did a new attestation in 2022. The 2022 attestation also does not have an end date and is not required to be renewed at any time. The attestation ends when the agreement is terminated by either parties. Anticipated Completion Date: March 2023 Contact Person: Stephanie Aulis
Finding Reference Number: 2022-030 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Medicaid National Correct Coding Initiative Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: 2021-035 Statistically Valid Sample: No Criteria In accordance with Section 1903(r) of the Social Security Act, effective October 1, 2010, SMAs were required to incorporate NCCI methodologies into the state Medicaid programs pursuant to the requirements of Section 6507 of the Affordable Care Act. In paying applicable Medicaid claims, states? MES are required to completely and correctly implement the following six Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed. a. NCCI Procedure-to-Procedure (PTP) edits for practitioner and ambulatory surgical center (ASC) claims. b. NCCI PTP edits for outpatient hospital services, including emergency department, observation care, and outpatient hospital laboratory services. c. Medically Unlikely Edit (MUE) units of service (UOS) edits for practitioner and ASC services. d. MUE UOS edits for outpatient hospital services including emergency department, observation care, and outpatient hospital laboratory services. e. MUE UOS edits for durable medical equipment (DME) billed by providers. f. NCCI PTP edits for durable medical equipment (added in October 2012). States are also required to use: ? all four components of each Medicaid NCCI methodology; ? the most recent quarterly Medicaid NCCI edit files for states; ? the Medicaid NCCI edits in effect for the date of service on the claim line or claim; ? the claim-adjudication rules in the Medicaid NCCI methodologies; and ? all modifiers for Healthcare Common Procedure Coding System (HCPCS) codes and Current Procedural Terminology (CPT) codes needed for the correct adjudication of applicable Medicaid claims. The NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual contain additional requirements for implementation of the NCCI methodologies. The Medicaid NCCI methodologies must be applied to Medicaid fee-for-service claims submitted with, and reimbursed on the basis of, HCPCS codes and CPT codes. This includes claims reimbursed on a fee-for-service basis in state Medicaid Primary Care Case Management managed care programs. Application of NCCI methodologies to fee-for-service claims processed by other entities, including limited benefit plans or Managed Care Organizations, is not required; however, if SMAs require the application of NCCI methodologies to fee-for-service claims processed by such entities, then such entities must meet NCCI program requirements, including compliance with the NCCI Medicaid Policy Manual and the NCCI Medicaid Technical Guidance Manual. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition Per the Department of Health and Human Services (the Department), the edits required by the above CMS criteria reside in the Medicaid Management Information System (MMIS) and are activated based on responses sent back to MMIS from Cotiviti, a third-party vendor. MMIS is managed by Conduent. Conduent has a SOC1 report prepared to report on the fairness of the presentation of management?s description of the service organization?s system and the suitability of the design of the controls to achieve the related control objectives included in the description as of a specified date. The Conduent SOC1 report for the period July 1, 2021, to June 30, 2022, provided a brief description in the report of the NCCI process with Cotiviti and the related NCCI edits within MMIS, and management indicated that the NCCI edits were included in the control objective testing within the SOC report. However, the NCCI edits were not included in the Change Management population testing and as such, we were unable to rely on the NCCI edits. Based on this, there was no ability for us to validate in accordance with the criteria noted above the NCCI process as the control environment and control objectives were not identified in the SOC report and were not included within all relevant GITC populations. Cause The cause of the condition found was primarily due to the Departments on-going efforts with Conduent and their SOC auditor to ensure the documentation needed to support the testing of the automatic MMIS NCCI edits are contained and clearly documented within the SOC1 report and ensuring the edits were appropriately included in all testing. Effect The six required Medicaid NCCI methodologies to ensure that only proper payments of procedures are reimbursed may not be completely and correctly implemented by the Department?s third-party service organization. Questioned Costs Not determinable. Recommendation We recommend the Department works with the service organization to identify the automated NCCI edit checks and supporting general IT controls to be covered within the SOC 1 report so that it meets federal guidelines for compliance. View of Responsible Officials We concur and have developed a corrective action plan in conjunction with Conduent. See attached plan. The SOC report will include auditing the change management of the quarterly NCCI edit checks. The auditing firm will also update the control objective 5 activities to include a population of claims specifically with NCCI edits. Anticipated Completion Date: The completed 6/30/2023 SOC report. Contact Person: Roger Boissonneau, MMIS Director
Finding Reference Number: 2022-031 NH Department of Health and Human Services Medicaid Cluster (Assistance Listing #93.775, #93.777, and #93,778) Federal Award Numbers: 2005NH5MAP, 2105NH5MAP, 2205NH5MAP, 2005NH5ADM, 2105NH5ADM, 2205NH5ADM, 2005NHIMPL, 2105NHIMPL, 2205NHIMPL Federal Award Years: 2020, 2021, 2022 U.S. Department of Health and Human Services Compliance Requirement: Special Tests and Provision: Managed Care Financial Audit Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: No Statistically Valid Sample: No Criteria Effective no later than for rating periods for contracts starting on or after July 1, 2017, the state must periodically, but no less frequently than once every three years, conduct, or contract for an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of each MCO, PIHP, and PAHP and post the results of these audits on its website (42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920). Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During the year ended June 30, 2021, we noted the Department of Health and Human Services (the Department) was in the request for proposal (RFP) process for a vendor to perform the required periodic audits, for the year-ended June 30, 2020, which is within the 3-year cycle, which was to be completed during the year ended June 30, 2021. However, during our year ended June 30, 2022, federal single audit we noted the RFP process was not completed and the required periodic audit had not been conducted. Cause The Department was unable to complete the process to engage a vendor to ensure periodic audits were performed and posted on the State's website. Effect The Department is not in compliance with the requirements of 42 CFR section 438.602(e) and (g); May 6, 2016, Federal Register (81 FR 27497); OMB No. 0938-0920. Questioned Costs None. Recommendation We recommend the Department complete the RFP process to select a vendor to perform the required periodic audits for the period ended June 30, 2020, and going forward as required by the regulations. View of Responsible Officials We concur. The Department has contracted with Myers & Stauffer (M&S) to conduct the periodic audits of all three of its Managed Care plans for State Plan Rate Year 2020. We anticipate the audits will be completed by August 2023. Anticipated Completion Date: September 2023 Contact Person: Shirley Iacopino
Finding Reference Number: 2022-032 NH Department of Safety Disaster Grants ? Public Assistance (Presidentially Declared Disasters) and COVID-19 Public Assistance (Presidentially Declared Disasters) (Assistance Listing #97.036) Federal Award Numbers: FEMA-4622-DR-NH, FEMA-4457-DR-NH, FEMA-4370-DR, FEMA-4371-DR, FEMA-4335-DR, FEMA-4329-DR, FEMA-4516-DR-NH Federal Award Year: October 16, 2021, July 11-12, 2019, March 2-8, 2018, March 13-12, 2018, January 2, 2018, October 29-November 1, 2017, July 1-2, 2017, January 20, 2020 U.S. Department of Homeland Security Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria The SF-425, Federal Financial Report, is required to be filed annually. Quarterly progress reports are due from recipients on all open large projects 30 days after the end of each calendar quarter. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over federal reporting as part of the reporting, we noted the following: A. We noted for 1 out of 5 SF425's tested the total federal funds authorized (d) per the SF 425 report did not agree to the SAG Smartlink Report. The SF 425 box (d) reported $9,556,675, while Smartlink reported $9,503,026. Per inquiry with the New Hampshire Department of Safety (the Department), there were some projects that were de-obligated during the quarter. The Department did not update this amount on the SF 425, as the line should have read $9,503,025. The amount reported was the balance from the prior quarter. Subsequent to our identification of the error, the Department has revised the report and resubmitted the corrected version B. We noted for 1 of 16 Quarterly Progress Reports (QPR) selected for testwork the subrecipient was listed within the QPR report population provided by Department indicating they were required to file the QPR report. However, no such report was required to be filed and as such we were unable to validate the completeness of the QPR report population to ensure that all required QPR reports were properly filed. C. We noted for 5 of the remaining 15 QPR reports selected for testwork that the Department did not provide sufficient documentation to either support the accuracy of the amounts reported or the support documentation provided did not agree to the amount reported within the QPR. As such we are unable to substantiate the accuracy of the amounts reported to FEMA on the QPR reports. Cause The cause of the condition found was primarily due to insufficient internal controls related to reporting. Specifically, the internal controls in place did not operate at a precision level to detect a overstatement in amounts reported on the SF-425 report. Additionally, management does not have sufficient internal controls in place to track QPR reports and retain appropriate supporting documentation to substantiate amounts reported. Effect The effect of the condition found is that the Department did not file SF-425 reports and QPR reports accurately. Questioned Costs None. Recommendation We recommend that the Department ensure the operating effectiveness of its internal controls over financial and performance reporting are at a precision level sufficient enough to ensure the accuracy of its federal reporting. View of Responsible Officials Corrective actions are currently in development to address the completeness and accuracy of HSEM?s federal reporting. Anticipated Completion Date: June 30, 2023 Contact Person: Matthew Hotchkiss, Financial Manager HSEM, 603-223-3624, Matthew.A.Hotchkiss@dos.nh.gov
Finding Reference Number: 2022-032 NH Department of Safety Disaster Grants ? Public Assistance (Presidentially Declared Disasters) and COVID-19 Public Assistance (Presidentially Declared Disasters) (Assistance Listing #97.036) Federal Award Numbers: FEMA-4622-DR-NH, FEMA-4457-DR-NH, FEMA-4370-DR, FEMA-4371-DR, FEMA-4335-DR, FEMA-4329-DR, FEMA-4516-DR-NH Federal Award Year: October 16, 2021, July 11-12, 2019, March 2-8, 2018, March 13-12, 2018, January 2, 2018, October 29-November 1, 2017, July 1-2, 2017, January 20, 2020 U.S. Department of Homeland Security Compliance Requirement: Reporting Type of Finding: Material Weakness and Material Noncompliance Prior Year Finding: None Statistically Valid Sample: No Criteria The SF-425, Federal Financial Report, is required to be filed annually. Quarterly progress reports are due from recipients on all open large projects 30 days after the end of each calendar quarter. Additionally, Title 45 U.S. Code of Federal Regulation Part 75 (45 CFR section 75), Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HS Awards, section 75.303(a), Internal Controls, states the non-Federal entity must establish and maintain effective internal control over the federal award that provides reasonable assurance that the non-Federal entity is managing the federal award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. Condition During our testwork over federal reporting as part of the reporting, we noted the following: A. We noted for 1 out of 5 SF425's tested the total federal funds authorized (d) per the SF 425 report did not agree to the SAG Smartlink Report. The SF 425 box (d) reported $9,556,675, while Smartlink reported $9,503,026. Per inquiry with the New Hampshire Department of Safety (the Department), there were some projects that were de-obligated during the quarter. The Department did not update this amount on the SF 425, as the line should have read $9,503,025. The amount reported was the balance from the prior quarter. Subsequent to our identification of the error, the Department has revised the report and resubmitted the corrected version B. We noted for 1 of 16 Quarterly Progress Reports (QPR) selected for testwork the subrecipient was listed within the QPR report population provided by Department indicating they were required to file the QPR report. However, no such report was required to be filed and as such we were unable to validate the completeness of the QPR report population to ensure that all required QPR reports were properly filed. C. We noted for 5 of the remaining 15 QPR reports selected for testwork that the Department did not provide sufficient documentation to either support the accuracy of the amounts reported or the support documentation provided did not agree to the amount reported within the QPR. As such we are unable to substantiate the accuracy of the amounts reported to FEMA on the QPR reports. Cause The cause of the condition found was primarily due to insufficient internal controls related to reporting. Specifically, the internal controls in place did not operate at a precision level to detect a overstatement in amounts reported on the SF-425 report. Additionally, management does not have sufficient internal controls in place to track QPR reports and retain appropriate supporting documentation to substantiate amounts reported. Effect The effect of the condition found is that the Department did not file SF-425 reports and QPR reports accurately. Questioned Costs None. Recommendation We recommend that the Department ensure the operating effectiveness of its internal controls over financial and performance reporting are at a precision level sufficient enough to ensure the accuracy of its federal reporting. View of Responsible Officials Corrective actions are currently in development to address the completeness and accuracy of HSEM?s federal reporting. Anticipated Completion Date: June 30, 2023 Contact Person: Matthew Hotchkiss, Financial Manager HSEM, 603-223-3624, Matthew.A.Hotchkiss@dos.nh.gov