IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
SNAP CLUSTER ? INELIGIBLE RECIPIENT Finding Number: 2022-011 State Agency Number: JFS-03 Assistance Listing Number and Title: 10.551/10.561 ? SNAP Cluster Federal Award Identification Number / Year: 202OH102S2514 / 2020 202OH102S6018 / 2020 212OH102S2514 / 2021 212OH102S6018 / 2021 222OH102S2514 / 2022 222OH102S6018 / 2022 Federal Agency: Department of Agriculture Compliance Requirement: Eligibility Repeat Finding from Prior Audit? No QUESTIONED COSTS 7 C.F.R. ?272.10(b)(1)(i), pertaining to the Supplemental Nutrition Assistance Program (SNAP) Cluster, states in part, that a State?s system should: Determine eligibility and calculate benefits or validate the eligibility worker?s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members? names, addresses, dates of birth, social security numbers, individual household members? earned and unearned income by source, deductions, resources and household size) ? Ohio Admin. Code (OAC) 5101:4-4-31(H) states: . . . When should actual income be used instead of converted income? When a full month's income is anticipated and income is received on a weekly or biweekly basis, the county agency shall determine monthly income by multiplying weekly amounts by 4.3 and biweekly amounts by 2.15. In one-month certifications, income on less than a monthly basis may be computed by using the actual income that is to be received. When income that was received on a weekly or biweekly basis has stopped, actual income (not converted) is used. As the lead agency responsible for administering the SNAP Cluster federal program for the State of Ohio, the Department is responsible for overall program compliance which includes ensuring only eligible individuals receive assistance and documentation maintained to support eligibility determinations is accurate, complete, and properly recorded in the Ohio Benefits (OB) system. It is the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the SNAP Cluster rules and regulations and only eligible recipients receive benefits. It is also the Department's responsibility to have appropriate oversight and monitoring procedures in place to ensure these controls, systems, processes and procedures are operating as intended and to comply with program guidelines and requirements. During state fiscal year 2022, the Department disbursed approximately $4.5 billion in federal assistance to eligible recipients from the SNAP Cluster program based on information provided by the 88 County Departments of Job and Family Services (CDJFS). The CDJFS caseworkers are responsible for obtaining the required eligibility information and entering it into OB in order for the application to be processed and the eligibility determination to be made. However, for one of 60 (1.67%) SNAP Cluster case files selected for testing at 10 CDJFS, totaling $592, the CDJFS (Montgomery) did not properly enter the income frequency into OB based on supporting documentation provided by the recipient. The caseworker entered the income frequency as `one-time?; however, it should have been `bi-weekly?. Therefore, the income was not converted correctly in accordance with OAC 5101:4-4-31 which resulted in an understatement of income and overcalculation of benefits. As such, we will question all benefits issued to the recipient totaling $3,629 (projected to an amount greater than $25,000). By not properly entering correct recipient income information into OB, inaccurate eligibility determinations could be made or recipient benefit issuance amounts could be miscalculated. If the Department does not consistently review the required documentation on file and in OB, the Department may not be able to fully support or ensure payments were made only to, or on behalf of, eligible recipients, and that the Department complied with all federal rules and regulations. This could result in additional questioned costs, a reduction in federal funding, or sanctions imposed by the federal grantor agency. Based on discussions with Department and CDJFS management, the information not accurately entered into OB was due to oversight by the caseworker. We recommend the Department review existing controls and/or update policies and procedures at both the State and CDJFS to ensure the recipient information in OB is accurate. These procedures should include periodic reviews of the case files to reasonably ensure the applicant/eligibility information is accurately entered into the system. The Department should communicate to CDJFS management and staff the importance of these policies and procedures and implement or update existing monitoring controls to ensure these procedures are carried out as intended. Lastly, the Department should investigate the recipient specifically identified in this finding to ensure any necessary repayments are made or additional actions are taken.
SNAP CLUSTER AND TANF ? IEVS ALERTS Finding Number: 2022-013 State Agency Number: JFS-05 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2022 (SNAP Cluster) 222OH102S6018 / 2022 (SNAP Cluster) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Eligibility, Special Tests and Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-013 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001, and 2022-017 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.8(c), states the following regarding the Supplemental Nutrition Assistance Program (SNAP) Cluster: (1) State agency action on information items about recipient households shall include: (i) Review of the information and comparison of it to case record information; (ii) For all new or previously unverified information received, contact with the households and/or collateral contacts to resolve discrepancies as specified in ???273.2(f)(4)(iv) and 273.2 (f)(9)(iii) and (f)(9)(iv); and (iii) If discrepancies warrant reducing benefits or terminating eligibility, notices of adverse action. (2) State agencies must initiate and pursue the actions on recipient households specified in paragraph (c)(1) of this section so that the actions are completed within 45 days of receipt of the information items. Actions may be completed later than 45 days from the receipt of information if: (A) The only reason that the actions cannot be completed is the nonreceipt of verification requested from collateral contacts; and (B) The actions are completed as specified in ? 273.12 of this chapter when verification from a collateral contact is received or in conjunction with the next case action when such verification is not received, whichever is earlier. (3) When the actions specified in paragraph (c)(1) of this section substantiate an over issuance, State agencies must establish and take actions on claims as specified in ??273.18 of this chapter. (4) State agencies must use appropriate procedures to monitor the timeliness requirements in paragraph (c)(2) of this section. 45 C.F.R. ? 205.56(a)(1)(iv) states the following regarding the Temporary Assistance for Needy Families (TANF) program: For individuals who are recipients when the information is received or for whom a decision could not be made prior to authorization of benefits, the State agency shall within forty-five (45) days of its receipt, initiate a notice of case action or an entry in the case record that no case action is necessary, except that: Completion of action may be delayed beyond forty-five (45) days on no more than twenty (20) percent of the information items targeted for follow-up, if: (A) The reason that the action cannot be completed within forty-five (45) days is the nonreceipt of requested third-party verification; and (B) Action is completed promptly, when third party verification is received or at the next time eligibility is redetermined, whichever is earlier. If action is completed when eligibility is redetermined and third party verification has not been received, the State agency shall make its decision based on information provided by the recipient and any other information in its possession. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. The Ohio Benefits system is utilized for processing eligibility for the SNAP Cluster and TANF programs with total expenditures to recipients of approximately $4.5 billion and $204 million, respectively, in state fiscal year (SFY) 2022. The Ohio Benefits system, administered by the Ohio Department of Administrative Services (DAS) for various public assistance programs, includes an Income Eligibility Verification System (IEVS) which compares income, as reported by the recipients, to information maintained by outside sources. Information that does not agree is communicated in the form of an Ohio Benefits system alert, which is forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming Internal Revenue Service (IRS) alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct and monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts. Also, the JFSR 4005, IEVS Monthly Summary Report, continues to be monitored by the Department?s Fraud Control staff to better recognize those county agencies who require additional training and technical assistance; however, no evidence is documented or maintained. The Department also continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. Therefore, the Department did not have effective controls or procedures in place to review and monitor the IEVS alerts generated and processed by the Ohio Benefits system to ensure they were being completed by the counties in accordance with the requirements and timeframes established in 7 C.F.R. ? 272.8, and 45 C.F.R. ? 205.56. Furthermore, an Ohio Benefits report showed 349,020 of the 556,539 (63%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, for an average of 189 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframes increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that continue to reduce the number of alerts sent to county caseworkers. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to perform periodic and timely reviews at the Department level to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. Such procedures should also include required monitoring by each County IEVS Coordinator or other supervisory personnel (through the eligibility system), which should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to monitor the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper timeframes, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Continuing to conduct and evaluate statewide and individual IEVS training for county caseworkers to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system. These trainings should be mandatory for all county personnel involved in the alerts process. We also recommend Department management continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
SNAP CLUSTER AND TANF ? ELIGIBILITY SYSTEM Finding Number: 2022-017 State Agency Number: JFS-09 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-018 MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-013 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.10(b)(1)(i), pertaining to the SNAP Cluster, states in part, that a State?s system should: Determine eligibility and calculate benefits or validate the eligibility worker?s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members? names, addresses, dates of birth, social security numbers, individual household members? earned and unearned income by source, deductions, resources and household size) ? 45 C.F.R. ? 206.10(a), pertaining to public assistance programs, including TANF, states in part: ? (8) Each decision regarding eligibility or ineligibility will be supported by facts in the applicant?s or recipient?s case record? ? (12) The State agency shall establish and maintain methods by which it shall be kept currently informed about local agencies' adherence to the State plan provisions and to the State agency's procedural requirements for determining eligibility, and it shall take corrective action when necessary. As the lead agency responsible for administering the SNAP Cluster and TANF federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is also responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of nearly $4.7 billion in public assistance payments, to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients * 10.551/10.561 ? SNAP Cluster $ 4,465,389,555 1,502,137 93.558 ? TANF $ 203,674,740 73,104 Combined Total $ 4,669,064,295 1,575,241 * We did not separately identify recipients who could be covered under both programs These programs are administered using a multi-agency approach, as follows: overall compliance and administration of the SNAP Cluster and TANF programs fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration, Internal Revenue Service (IRS), etc.). The Department also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system for processing. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct, as well as monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts: these random reviews are looked at during the Fraud Triad Reviews. Also, the Department?s Fraud Control staff monitors the JFSR 4005, IEVS Monthly Summary Report to better recognize those county agencies which require additional training and technical assistance; however, no evidence of this monitoring is documented or maintained. ? Caseworker Reliance/Training ? The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. The Department continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. Failure to correct system weaknesses and system alerts creates an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s state supervised, county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to perform periodic and timely reviews of the JFSR 4005, IEVS Monthly Summary Report to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. The Department should also continue to perform monitoring reviews which should include verification that each County IEVS Coordinator, or other supervisory personnel, is conducting random reviews of the IEVS alerts (through the eligibility system) to determine the appropriate disposition of the alert and that it was worked timely. These random reviews should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. The Department should continue to provide this training initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
SNAP CLUSTER ? INELIGIBLE RECIPIENT Finding Number: 2022-011 State Agency Number: JFS-03 Assistance Listing Number and Title: 10.551/10.561 ? SNAP Cluster Federal Award Identification Number / Year: 202OH102S2514 / 2020 202OH102S6018 / 2020 212OH102S2514 / 2021 212OH102S6018 / 2021 222OH102S2514 / 2022 222OH102S6018 / 2022 Federal Agency: Department of Agriculture Compliance Requirement: Eligibility Repeat Finding from Prior Audit? No QUESTIONED COSTS 7 C.F.R. ?272.10(b)(1)(i), pertaining to the Supplemental Nutrition Assistance Program (SNAP) Cluster, states in part, that a State?s system should: Determine eligibility and calculate benefits or validate the eligibility worker?s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members? names, addresses, dates of birth, social security numbers, individual household members? earned and unearned income by source, deductions, resources and household size) ? Ohio Admin. Code (OAC) 5101:4-4-31(H) states: . . . When should actual income be used instead of converted income? When a full month's income is anticipated and income is received on a weekly or biweekly basis, the county agency shall determine monthly income by multiplying weekly amounts by 4.3 and biweekly amounts by 2.15. In one-month certifications, income on less than a monthly basis may be computed by using the actual income that is to be received. When income that was received on a weekly or biweekly basis has stopped, actual income (not converted) is used. As the lead agency responsible for administering the SNAP Cluster federal program for the State of Ohio, the Department is responsible for overall program compliance which includes ensuring only eligible individuals receive assistance and documentation maintained to support eligibility determinations is accurate, complete, and properly recorded in the Ohio Benefits (OB) system. It is the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the SNAP Cluster rules and regulations and only eligible recipients receive benefits. It is also the Department's responsibility to have appropriate oversight and monitoring procedures in place to ensure these controls, systems, processes and procedures are operating as intended and to comply with program guidelines and requirements. During state fiscal year 2022, the Department disbursed approximately $4.5 billion in federal assistance to eligible recipients from the SNAP Cluster program based on information provided by the 88 County Departments of Job and Family Services (CDJFS). The CDJFS caseworkers are responsible for obtaining the required eligibility information and entering it into OB in order for the application to be processed and the eligibility determination to be made. However, for one of 60 (1.67%) SNAP Cluster case files selected for testing at 10 CDJFS, totaling $592, the CDJFS (Montgomery) did not properly enter the income frequency into OB based on supporting documentation provided by the recipient. The caseworker entered the income frequency as `one-time?; however, it should have been `bi-weekly?. Therefore, the income was not converted correctly in accordance with OAC 5101:4-4-31 which resulted in an understatement of income and overcalculation of benefits. As such, we will question all benefits issued to the recipient totaling $3,629 (projected to an amount greater than $25,000). By not properly entering correct recipient income information into OB, inaccurate eligibility determinations could be made or recipient benefit issuance amounts could be miscalculated. If the Department does not consistently review the required documentation on file and in OB, the Department may not be able to fully support or ensure payments were made only to, or on behalf of, eligible recipients, and that the Department complied with all federal rules and regulations. This could result in additional questioned costs, a reduction in federal funding, or sanctions imposed by the federal grantor agency. Based on discussions with Department and CDJFS management, the information not accurately entered into OB was due to oversight by the caseworker. We recommend the Department review existing controls and/or update policies and procedures at both the State and CDJFS to ensure the recipient information in OB is accurate. These procedures should include periodic reviews of the case files to reasonably ensure the applicant/eligibility information is accurately entered into the system. The Department should communicate to CDJFS management and staff the importance of these policies and procedures and implement or update existing monitoring controls to ensure these procedures are carried out as intended. Lastly, the Department should investigate the recipient specifically identified in this finding to ensure any necessary repayments are made or additional actions are taken.
SNAP CLUSTER AND TANF ? IEVS ALERTS Finding Number: 2022-013 State Agency Number: JFS-05 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2022 (SNAP Cluster) 222OH102S6018 / 2022 (SNAP Cluster) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Eligibility, Special Tests and Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-013 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001, and 2022-017 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.8(c), states the following regarding the Supplemental Nutrition Assistance Program (SNAP) Cluster: (1) State agency action on information items about recipient households shall include: (i) Review of the information and comparison of it to case record information; (ii) For all new or previously unverified information received, contact with the households and/or collateral contacts to resolve discrepancies as specified in ???273.2(f)(4)(iv) and 273.2 (f)(9)(iii) and (f)(9)(iv); and (iii) If discrepancies warrant reducing benefits or terminating eligibility, notices of adverse action. (2) State agencies must initiate and pursue the actions on recipient households specified in paragraph (c)(1) of this section so that the actions are completed within 45 days of receipt of the information items. Actions may be completed later than 45 days from the receipt of information if: (A) The only reason that the actions cannot be completed is the nonreceipt of verification requested from collateral contacts; and (B) The actions are completed as specified in ? 273.12 of this chapter when verification from a collateral contact is received or in conjunction with the next case action when such verification is not received, whichever is earlier. (3) When the actions specified in paragraph (c)(1) of this section substantiate an over issuance, State agencies must establish and take actions on claims as specified in ??273.18 of this chapter. (4) State agencies must use appropriate procedures to monitor the timeliness requirements in paragraph (c)(2) of this section. 45 C.F.R. ? 205.56(a)(1)(iv) states the following regarding the Temporary Assistance for Needy Families (TANF) program: For individuals who are recipients when the information is received or for whom a decision could not be made prior to authorization of benefits, the State agency shall within forty-five (45) days of its receipt, initiate a notice of case action or an entry in the case record that no case action is necessary, except that: Completion of action may be delayed beyond forty-five (45) days on no more than twenty (20) percent of the information items targeted for follow-up, if: (A) The reason that the action cannot be completed within forty-five (45) days is the nonreceipt of requested third-party verification; and (B) Action is completed promptly, when third party verification is received or at the next time eligibility is redetermined, whichever is earlier. If action is completed when eligibility is redetermined and third party verification has not been received, the State agency shall make its decision based on information provided by the recipient and any other information in its possession. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. The Ohio Benefits system is utilized for processing eligibility for the SNAP Cluster and TANF programs with total expenditures to recipients of approximately $4.5 billion and $204 million, respectively, in state fiscal year (SFY) 2022. The Ohio Benefits system, administered by the Ohio Department of Administrative Services (DAS) for various public assistance programs, includes an Income Eligibility Verification System (IEVS) which compares income, as reported by the recipients, to information maintained by outside sources. Information that does not agree is communicated in the form of an Ohio Benefits system alert, which is forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming Internal Revenue Service (IRS) alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct and monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts. Also, the JFSR 4005, IEVS Monthly Summary Report, continues to be monitored by the Department?s Fraud Control staff to better recognize those county agencies who require additional training and technical assistance; however, no evidence is documented or maintained. The Department also continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. Therefore, the Department did not have effective controls or procedures in place to review and monitor the IEVS alerts generated and processed by the Ohio Benefits system to ensure they were being completed by the counties in accordance with the requirements and timeframes established in 7 C.F.R. ? 272.8, and 45 C.F.R. ? 205.56. Furthermore, an Ohio Benefits report showed 349,020 of the 556,539 (63%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, for an average of 189 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframes increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that continue to reduce the number of alerts sent to county caseworkers. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to perform periodic and timely reviews at the Department level to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. Such procedures should also include required monitoring by each County IEVS Coordinator or other supervisory personnel (through the eligibility system), which should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to monitor the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper timeframes, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Continuing to conduct and evaluate statewide and individual IEVS training for county caseworkers to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system. These trainings should be mandatory for all county personnel involved in the alerts process. We also recommend Department management continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
SNAP CLUSTER AND TANF ? ELIGIBILITY SYSTEM Finding Number: 2022-017 State Agency Number: JFS-09 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-018 MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-013 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.10(b)(1)(i), pertaining to the SNAP Cluster, states in part, that a State?s system should: Determine eligibility and calculate benefits or validate the eligibility worker?s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members? names, addresses, dates of birth, social security numbers, individual household members? earned and unearned income by source, deductions, resources and household size) ? 45 C.F.R. ? 206.10(a), pertaining to public assistance programs, including TANF, states in part: ? (8) Each decision regarding eligibility or ineligibility will be supported by facts in the applicant?s or recipient?s case record? ? (12) The State agency shall establish and maintain methods by which it shall be kept currently informed about local agencies' adherence to the State plan provisions and to the State agency's procedural requirements for determining eligibility, and it shall take corrective action when necessary. As the lead agency responsible for administering the SNAP Cluster and TANF federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is also responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of nearly $4.7 billion in public assistance payments, to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients * 10.551/10.561 ? SNAP Cluster $ 4,465,389,555 1,502,137 93.558 ? TANF $ 203,674,740 73,104 Combined Total $ 4,669,064,295 1,575,241 * We did not separately identify recipients who could be covered under both programs These programs are administered using a multi-agency approach, as follows: overall compliance and administration of the SNAP Cluster and TANF programs fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration, Internal Revenue Service (IRS), etc.). The Department also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system for processing. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct, as well as monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts: these random reviews are looked at during the Fraud Triad Reviews. Also, the Department?s Fraud Control staff monitors the JFSR 4005, IEVS Monthly Summary Report to better recognize those county agencies which require additional training and technical assistance; however, no evidence of this monitoring is documented or maintained. ? Caseworker Reliance/Training ? The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. The Department continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. Failure to correct system weaknesses and system alerts creates an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s state supervised, county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to perform periodic and timely reviews of the JFSR 4005, IEVS Monthly Summary Report to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. The Department should also continue to perform monitoring reviews which should include verification that each County IEVS Coordinator, or other supervisory personnel, is conducting random reviews of the IEVS alerts (through the eligibility system) to determine the appropriate disposition of the alert and that it was worked timely. These random reviews should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. The Department should continue to provide this training initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
CDBG ? REPORTING Finding Number: 2022-003 State Agency Number: DEV-02 Assistance Listing Number and Title: 14.228 ? Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii (CDBG) Federal Award Identification Number / Year: B-16-DC-39-0001 / 2016 B-17-DC-39-0001 / 2017 B-18-DC-39-0001 / 2018 B-19-DC-39-0001 / 2019 B-20-DC-39-0001 / 2020 Federal Agency: Department of Housing and Urban Development Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 24 C.F.R. Part 91 ? 520 states, in part: (a) General. Each jurisdiction that has an approved consolidated plan shall annually review and report, in a form prescribed by HUD [U.S. Department of Housing and Urban Development], on the progress it has made in carrying out its strategic plan and its action plan. The performance report must include a description of the resources made available, the investment of available resources, the geographic distribution and location of investments, the families and persons assisted (including the racial and ethnic status of persons assisted), actions taken to affirmatively further fair housing, and other actions indicated in the strategic plan and the action plan? ? (d) CDBG. For CDBG recipients, the report shall include a description of the use of CDBG funds during the program year and an assessment by the jurisdiction of the relationship of that use to the priorities and specific objectives identified in the plan, giving special attention to the highest priority activities that were identified? To provide guidance on the prescribed performance report format, HUD issued Notice CPD-21-11 which outlines the format of the Consolidated Annual Performance and Evaluation Report (CAPER), including the PR28 Financial Summary Report. Information captured in the report includes sources of CDBG funds and vouchers made against those sources for all open annual State CDBG grants. It is management?s responsibility to implement procedures to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with the program requirements. It is imperative that management monitor these procedures, as well as maintain the underlying data and documentation used to support the information contained within the reports. The Department compiles the CAPER?s PR28 Financial Summary Report, using financial data from the Department?s OCEAN system which is used to track and maintain information on subgrant activity, including information on amounts drawn from HUD?s Integrated Disbursement and Information System (IDIS) against active Federal grants. Once prepared, the report is reviewed by the Deputy Chief of the Department?s Office of Community Development and submitted to HUD. However, the Department could not provide the supporting documentation used to compile the CAPER and PR28 reports submitted during the audit period. As an alternative method to ensure accuracy of the amounts reported for annual State CDBG grants in the PR28 report, we compared them to information obtained from the State?s accounting system, the Ohio Administrative Knowledge System. The following variances were noted: Grant Year FAIN Amounts Drawn per PR28 Report Amounts Drawn per OAKS Variance 2016 B-16-DC-39-0001 $ 41,063,331 $ 41,151,241 $ 87,910 0.21% 2017 B-17-DC-39-0001 $ 39,629,560 $ 39,803,352 $ 173,792 0.44% 2018 B-18-DC-39-0001 $ 44,508,253 $ 43,100,790 $ (1,407,463) -3.26% 2019 B-19-DC-39-0001 $ 36,138,582 $ 35,589,654 $ (548,928) -1.54% 2020 B-20-DC-39-0001 $ 23,968,274 $ 21,828,742 $ (2,139,532) -15.18% Inadequate internal control procedures governing the retention of information used to prepare federal reports increases the risk of inaccurate reporting to the federal grantor agency. Inaccurate and incomplete reporting could subject the Department to fines, penalties, or a reduction of federal funding. Based on discussions with management, the original supporting documentation could not be located due to turnover at the employee position responsible for preparing the report. Additionally, the OCEAN system does not allow the Department to re-run the reports used as of a historical date. We recommend the Department evaluate and update its existing procedures regarding record retention surrounding federal reports, if necessary, to provide reasonable assurance the data being reported for the CDBG program is accurate and properly supported. We further recommend the Department consider updating the OCEAN system to allow for producing historical reports, as well as consider using the OAKS or IDIS financial data to compile the report and/or to help ensure completeness of the data from OCEAN prior to submitting the report to the federal grantor agency. Management should periodically review and monitor these procedures to ensure they are operating effectively and as intended.
CDBG AND LIHEAP ? TRANSPARENCY ACT REPORTING Finding Number: 2022-004 State Agency Number: DEV-03 Assistance Listing Number and Title: 14.228 Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii (CDBG) 93.568 Low-Income Home Energy Assistance Program (LIHEAP) Federal Award Identification Number / Year: B-21-DC-39-0001 / 2021 (CDBG) 2101OHLIEA / 2021 (LIHEAP) Federal Agencies: Department of Housing and Urban Development Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-005 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department disbursed approximately $89 million for 236 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs: Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 14.228 CDBG 83 $27,193,724 93.568 LIHEAP 153 $61,742,923 The Department?s Finance Division managed Transparency Act reporting for all applicable programs, overseen by the Grant Strategy Manager. A tracking spreadsheet is maintained with all grants required to be reported or updated on the FSRS website with the key data elements required by the Transparency Act. The information within this spreadsheet is compiled from reports generated by the OCEAN system which the Department uses to track and maintain information on subgrant activity. Information within OCEAN is compiled by the grants personnel responsible for each federal program at the Department as well as through reporting via web interface by the subgrantee. However, there is no supervisory review of the Transparency Act reports prior to submission on the FSRS website. Further, the control procedures were not operating effectively and as a result, the following errors were noted for CDBG and LIHEAP: CDBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 3 9 3 3 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $3,016,000 $470,000 $3,016,000 $470,000 $470,000 LIHEAP Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 15 10 15 10 10 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,311,919 $ 4,728,604 $6,311,919 $4,728,604 $ 4,728,604 A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act Reports could be relying on inaccurate information. Based on discussions with management, the errors were due to beginning implementation of the reporting process late in the audit period. Additionally, the Department experienced difficulty in identifying all subawards made amongst the different offices responsible for administering federal awards, as well as obtaining all subaward information required to be reported under the Transparency Act. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards subject to the Transparency Act. We also recommend the Department continue implementation of its Transparency Act reporting process, including the process by which subawards are identified. Management should consider incorporating the input of the applicable offices within the Department to improve the process for identifying subawards and the key data elements for reporting, as well as the timeliness of reporting within the FSRS system. Management should periodically review these procedures to ensure they promote compliance with federal regulations and are operating as intended.
EMERGENCY SOLUTIONS GRANTS PROGRAM ? OBLIGATION REQUIREMENTS Finding Number: 2022-002 State Agency Number: DEV-01 Assistance Listing Number and Title: 14.231 Emergency Solutions Grants Program Federal Award Identification Number / Year: E-21-DC-39-0001 / 2021 Federal Agency: Department of Housing and Urban Development Compliance Requirement: Special Tests and Provisions - Obligation, Expenditure and Payment Requirements Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 24 C.F.R. Part 576 ? 203 (a) relates to obligation requirements for the Emergency Solutions Grants Program (ESGP) and states, in part: Obligation of funds. (1) Funds allocated to States. (i) Within 60 days from the date that HUD [U.S. Department of Housing and Urban Development] signs the grant agreement with the State (or grant amendment for reallocated funds), the recipient must obligate the entire grant, except the amount for its administrative costs. This requirement is met by a subgrant agreement with, or a letter of award requiring payment from the grant to, a subrecipient. . . . It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During the audit period, the Department was awarded approximately $6.2 million in ESGP funding for the 2021 federal program year. ESGP is funded on a biennial basis, with new awards typically granted in odd-numbered years. The Department?s allocation and award of program funds to subrecipients involves the creation of an annual Consolidated Plan submitted to HUD, a subrecipient pre-application eligibility review, final allocation of program funds, and approval of the finalized subgrant agreement. However, four of four (100%) ESGP subgrant agreements entered into during the audit period that were selected for testing were obligated late. The number of days late ranged from 237 to 257, with an average of 245. Without procedures in place to ensure timely obligation of funds in accordance with federal requirements, the Department could face a reduction or elimination of funding, or other penalties or sanctions imposed by the federal grantor agency. Based on discussions with management, there have been difficulties complying with this requirement due to the short length of time given to obligate funds without impacting the overall experience of subrecipients or overall compliance with other program requirements. Management indicated they are in ongoing communication with HUD to resolve the matter. We recommend the Department review and evaluate its current ESGP subgrant award process for redundancies or areas where time savings can be implemented. The Department should also identify areas of the process that could be completed prior to the federal grantor agency awarding the funds. Management should also periodically monitor these processes and procedures to ensure they are operating effectively and meeting their objectives.
UNEMPLOYMENT INSURANCE ? FRAUD ISSUES AND OVERPAYMENTS Finding Number: 2022-012 State Agency Number: JFS-04 Assistance Listing Number and Title: 17.225 ? Unemployment Insurance 17.225 COVID-19 ? Unemployment Insurance Federal Award Identification Number / Year: UI-34078-20-55-A-39 / 2020 UI-35668-21-55-A-39 / 2021 UI-37243-22-55-A-39 / 2022 Federal Agency: Department of Labor Compliance Requirement: Special Tests and Provisions ? UI Program Integrity ? Overpayments Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-012 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-009 and 2022-010 detail questioned costs, noncompliance, and weaknesses in internal control related to the regular and pandemic Unemployment Insurance programs regarding fraud issues and overpayments. These findings are integral to and should be read in conjunction with this finding. The U.S. Department of Labor?s (DOL) Unemployment Program Insurance Letter (UIPL) No. 23-20 provides additional guidance to states regarding program integrity for the regular UI program and for the UI programs authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. UIPL 23-20, (4)(b) Program integrity functions for the regular UI programs and CARES Act programs, states, in part: ? The following BPC [Benefit Payment Control] activities are mandatory for states to implement for the regular UI programs on an ongoing basis. States must implement these functions for the Pandemic Emergency Unemployment Compensation (PEUC) and PUA [Pandemic Unemployment Assistance] programs in the same manner as for the regular UI programs. ? National Directory of New Hires Cross-match (UIPL Nos. 13-19 and 19-11). UIPL 13-19 provides detailed, recommended operating procedures for cross-matching with state and national directories of new hire data; ? Quarterly Wage Records Cross-match (20 CFR Section 603.23); and ? Systematic Alien Verification for Entitlement (SAVE) (Section 1137(d) of the Social Security Act (SSA) (42 U.S.C. Section1320b-7). The Department strongly recommends the following additional BPC activities as part of a state?s effective BPC operation for the regular UI programs, PUA and PEUC: ? State Directory of New Hires Cross-match; ? Social Security Administration (SSA) Cross-match; ? Interstate Benefits (IB) Cross-match; ? State Identification Inquiry (SID) and IB8606 enhancements made to the Interstate Connection (ICON) network cross match to prevent concurrent claim filing in multiple states; ? State Information Data Exchange System (SIDES); ? Identity Verification; ? Incarceration Cross-match; and, ? UI Integrity Center?s Integrity Data Hub (IDH) tools including Suspicious Actor Repository (SAR), Suspicious E-Mail Domains, Multi-State Cross-Match (MSCM), Foreign Internet Protocol (IP) Address Detection, and Fraud Alert application. 20 C.F.R. ? 625.14 pertaining to overpayments and disqualifications for fraud states, in part: . . . (h) Fraud Detection and prevention. Provisions in the procedures of each State with respect to detection and prevention of fraudulent overpayments of DUA [Disaster Unemployment Assistance] shall be, as a minimum, commensurate with the procedures adopted by the State with respect to regular compensation and consistent with the Secretary's ?Standard for Fraud and Overpayment Detection,? . . . UIPL No. 2-12, Change 1 provides additional guidance to states regarding program integrity for the regular UI program and amendments made by the Trade Adjustment Assistance Extension Act of 2011 (TAAEA) and states, in part: a. Require states to impose a monetary penalty (an amount not less than 15 percent of the erroneous payment) on claimants whose fraudulent acts resulted in overpayments; b. Prohibit states from providing relief from charges to an employer?s UC [Unemployment Compensation] account when a UC overpayment results from an employer (or an employer?s agent) failing to respond timely or adequately to a request for information by the state agency (i.e., employer or agent at fault), and, at minimum, the employer (or its agent) has established a pattern of failing to respond to such requests; and . . . Ohio Rev. Code ? 4141.35 states, in part: (A) If the director of job and family services finds that any fraudulent misrepresentation has been made by an applicant for or a recipient of benefits with the object of obtaining benefits to which the applicant or recipient was not entitled, and in addition to any other penalty or forfeiture under this chapter, then the director: (1) Shall within four years after the end of the benefit year in which the fraudulent misrepresentation was made reject or cancel such person's entire weekly claim for benefits that was fraudulently claimed, or the person's entire benefit rights if the misrepresentation was in connection with the filing of the claimant's application for determination of benefit rights; (2) Shall by order declare that, for each application for benefit rights and for each weekly claim canceled, such person shall be ineligible for two otherwise valid weekly claims for benefits, claimed within six years subsequent to the discovery of such misrepresentation; (3) By order shall require that the total amount of benefits rejected or canceled under division (A)(1) of this section be repaid to the director before such person may become eligible for further benefits, and shall withhold such unpaid sums from future benefit payments accruing and otherwise payable to such claimant. . . . (B) If the director finds that an applicant for benefits has been credited with a waiting period or paid benefits to which the applicant was not entitled for reasons other than fraudulent misrepresentation, the director shall: (1)(a) Within six months after the determination under which the claimant was credited with that waiting period or paid benefits becomes final pursuant to section 4141.28 of the Revised Code, or within three years after the end of the benefit year in which such benefits were claimed, whichever is later, by order cancel such waiting period and require that such benefits be repaid to the director or be withheld from any benefits to which such applicant is or may become entitled before any additional benefits are paid, provided that the repayment or withholding shall not be required where the overpayment is the result of the director's correcting a prior decision due to a typographical or clerical error in the director's prior decision, or an error in an employer's report under division (G) of section 4141.28 of the Revised Code. . . . Any overpayments made to the individual that have not previously been recovered under an unemployment benefit program of the United States may be recovered in accordance with section 303(g) of the "Social Security Act" and sections 3304(a)(4) and 3306(f) of the "Federal Unemployment Tax Act," 53 Stat. 183 (1939), 26 U.S.C.A. 3301 to 3311. . . . Ohio Rev. Code ? 131.02(A) states, in part: . . . if the amount is not paid within forty-five days after payment is due, the officer, employee, or agent shall certify the amount due to the attorney general, in the form and manner prescribed by the attorney general, and notify the director of budget and management thereof. . . . . UIPL No. 20-21 provides States instructions for assessing fraud penalties and processing overpayment waivers under the CARES Act, as amended. States must establish eligibility criteria for PUA, Federal Pandemic Unemployment Compensation (FPUC), Mixed Earners Unemployment Compensation (MEUC), and PEUC. In general, States are permitted to waive repayment if the overpayment identified was not the claimant's fault and the payment would be contrary to equity and good conscience. In addition, UIPL 20-21 states, in part: Application of a minimum 15 percent monetary penalty. Within the context of the CARES Act, states must apply a minimum 15 percent monetary penalty to an individual?s overpayment when the state determines that such an overpayment was made to an individual due to fraud. Fraud includes instances where an individual knowingly has made, or caused to be made by another, a false statement or representation of a material fact, or knowingly has failed, or caused another to fail, to disclose a material fact. This fraud penalty is applicable to PUA, FPUC, MEUC, PEUC, and the first week of regular UC that is reimbursed in accordance with Section 2105 of the CARES Act? States must apply the fraud monetary penalty for FPUC, MEUC, PEUC, and the first week of regular UC that is reimbursed in accordance with Section 2105 of the CARES Act for all fraud overpayments established on or after the date of publication for this UIPL [May 5, 2021]. It is management?s responsibility to design and implement internal control procedures to ensure compliance with UI program requirements outlined in the federal rules, regulations, and guidance, as well as state laws that govern the program. During state fiscal year (SFY) 2022, the Department disbursed approximately $1.69 billion in UI benefits processed through the Ohio Job Insurance (OJI) and uFACTS systems for the regular Unemployment and pandemic Unemployment programs. The OJI and uFACTS systems automatically generate the cross-match reports as required per UIPL No. 23-20; however, due to the COVID-19 pandemic, the Department had a significant backlog of potential overpayment issues during the audit period causing significant delays in processing time. An issue is created when the system cannot determine the impact of the benefit claim or is created based off of cross-matches. Issues suspected of fraud are forwarded to the Department?s Bureau of Payment Control to be investigated and then adjudicated. An Adjudicator reviews information, known as fact-finding, to make a determination on the benefit claim within 21-days per the Department?s Unemployment Compensation Policy Guide which is based on /a CORE Measure established by the DOL related to timeliness of the nonmonetary determinations for States. Once a determination is made, a Determination Notice or Notice of Overpayment is sent to the claimant. Due to the COVID-19 pandemic, the Department experienced a significant increase in the number of weekly unemployment benefit claims issued through the OJI and uFACTS systems (2,982,414 and 2,260,024, respectively during the year) which had a direct impact on the increase of fraud issues detected. The Department adjudicated 18,314 fraudulent claims for OJI and 293,781 fraudulent claims for uFACTS during SFY 2022. However, the process and/or requirements were not consistently followed, as noted below: ? Of the 25 OJI adjudicated fraud issues selected for testing: - 22 (88%) Notice of Determination/Notice of Overpayments were not issued within 21-days. Days late between the issue determination date and the Notice of Determination/Notice of Overpayment, ranged from 10 to 639 days, for an average of 232 days late. Three of these claims also had payments issued for the claim more than 21 days after the issue determination date. - 12 (48%) were not detected/flagged timely (30 days based on auditor?s judgement) from the benefit week ending date. Days late between the benefit week ending date and the date of issue, ranged from four to 487 days, for an average of 215 days late. - Nine (36%) were not sent the fact-finding questionnaire timely (seven days from the issue determination date based on auditor?s judgement). Days late between the issue determination date and the fact-finding ranged from 20 to 494 days, for an average of 158 days late. ? Of the 25 uFACTS adjudicated fraud issues selected for testing: - 16 (64%) Notice of Determination/Notice of Overpayments were not issued within 21-days. Days late between the issue determination date and the Notice of Determination/Notice of Overpayment ranged from 64 to 379 days, for an average of 196 days late. - 14 (56%) were not detected/flagged timely (30 days based on auditor?s judgement) from the benefit week ending date. Days late between the benefit week ending date and the date of issue ranged from 89 to 578 days, for an average of 334 days late. - Two (8%) were not sent the fact-finding questionnaire timely (seven days from the issue determination date based on auditor?s judgment). Days late between the issue determination date and the fact-finding were three and eight days, for an average of six days late. - Two (8%) did not have a stop payment completed timely (seven days from the issue determination date based on auditor's judgment). Days late between the issue determination date and the last paid claim were 180 and 366 days, for an average of 273 days late. Once an issue has been adjudicated, the Department?s Bureau of Payment Control is responsible for determining the claimant?s benefit overpayment and issues a Notice of Overpayment. Overpayments are benefits paid to individuals who are not legally entitled to receive these benefits. Losses through embezzlement or by theft, other than through the benefit payment process, are not counted as overpayments. Overpayments are reported to the DOL in the quarter and/or month in which they occur, which is once adjudication is complete. A fraud overpayment occurs when the material facts related to a determination or payment of a claim are found during the adjudication process to be knowingly misrepresented or concealed (i.e., willful misrepresentation) by the claimant in order to obtain benefits to which the individual is not legally entitled. A non-fraud overpayment occurs when the state agency determines, through adjudication, the overpayment is not due to willful misrepresentations. Non-fraud overpayments result from reversals, state agency errors, employer errors, and claimant errors. The Department reported approximately $598.2 million in fraudulent outstanding overpayments and $2.17 billion in non-fraudulent outstanding overpayments processed through OJI and uFACTS to the DOL as of June 30, 2022. If overpayments are based on fraud, the OJI and uFACTS systems are to automatically include a 15% penalty, as required by UPIL No. 20-21. The Department then notifies the claimant of the monetary penalties, attempts to collect the penalties, and deposits the penalties collected into the State?s Unemployment Trust Fund. Although the Department appropriately assessed a 15% monetary penalty for PUA and FPUC claims processed through uFACTS during SFY 2022, the Department did not assess the 15% monetary penalty for any FPUC overpayments processed through the OJI system. The Department attempts to collect overpayments by sending an appealable overpayment determination to the claimant. If repayment is not received within 45 days after the payment is due, the amount is certified to the Ohio Attorney General for collection pursuant to Ohio Rev. Code ?131.02. The federal government gave discretion to states to waive the need for a repayment of pandemic funding related to non-fraud overpayments, but claimants must request the waiver from the Department to avoid repayment. During SFY 2022, the Department processed 111,697 overpayment waiver requests and waived repayment of approximately $172.6 million based on approved claimant requests or other waivers. During SFY 2022, the Department certified the fraud and non-fraud overpayments processed through OJI to the Ohio Attorney General for collection; however, the Department only certified 1,000 overpayments processed through uFACTS, totaling $59,526, to the Ohio Attorney General for collection based on its manual process. The Department determined the manual process was too labor intensive and stopped certifying uFACTS overpayments to the Ohio Attorney General for collection until an automated process was developed and implemented in October 2022, after the end of the audit period. Additionally, the Department has flagged approximately $1.08 billion in potential overpayments for the regular Unemployment and the pandemic Unemployment programs as of June 30, 2022. Despite being flagged as potential overpayments, a final determination as to whether these are overpayments and/or fraudulent cannot be made until these claims are fully adjudicated. Without proper controls to ensure the timely identification of fraud issues and the adjudication of fraudulent and non-fraudulent issues and overpayment determinations (if applicable), the Department increases the risk of inaccurate or incomplete financial and/or programmatic activity being reported to the federal grantor agency. Furthermore, the Department is limiting the amount of funding available for program activities by not certifying and pursuing collection of the Unemployment benefit overpayments for the pandemic Unemployment programs, as well as by not properly assessing the monetary penalty to fraudulent FPUC claims processed through OJI. Based on discussions with management, these errors are due to the amount of time and effort necessary to adjudicate fraud and process the high volume of backlog of claims and potential overpayments, time necessary to implement system improvements, and oversight. We recommend the Department continue to evaluate, strengthen, and monitor internal controls and procedures related to UI fraud and overpayments to ensure they are working as management intended, including, but not limited to: ? Periodic management reviews of the cross-match documentation to ensure the matches are being performed timely and as intended. If the information necessary to complete the cross-matches is obtained from an outside party, the Department should work with the entity to ensure the information is obtained timely. Additionally, the Department should continue to prioritize issues based on the aging of issues created by the cross-matches, monitor the issue backlog, ensure issues are being addressed timely, and the Notices of Determination are issued in a timely manner. ? Periodic management reviews over the timing of the fact-finding questionnaires generated by the OJI and/or uFACTS systems once an issue has been created. ? Periodic management reviews over the certification of OJI and uFACTS overpayments to the Ohio Attorney General and subsequent collections. ? System enhancements within OJI to ensure the monetary fraud overpayment penalty amounts are being applied to each applicable overpayment. Management should monitor the system enhancements to ensure they are being captured, properly applied, and appropriately collected.
UNEMPLOYMENT INSURANCE ? DEATH FILE AND INCARCERATION CROSS-MATCHES Finding Number: 2022-009 State Agency Number: JFS-01 Assistance Listing Number and Title: 17.225 ? Unemployment Insurance 17.225 COVID-19 ? Unemployment Insurance Federal Award Identification Number / Year: UI-32619-19-55-A-39 / 2019 UI-34078-20-55-A-39 / 2020 UI-35668-21-55-A-39 / 2021 UI-37243-22-55-A-39 / 2022 Federal Agency: Department of Labor Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Costs Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-011 QUESTIONED COSTS AND SIGNIFICANT DEFICIENCY NOTE: Finding numbers 2022-010 and 2022-012 detail questioned costs, noncompliance, and weaknesses in internal control related to the regular and pandemic Unemployment Insurance programs regarding fraud issues and overpayments. These findings are integral to and should be read in conjunction with this finding. 2 C.F.R. ? 2900.4 gives regulatory effect to the Department of Labor for 2 C.F.R. ? 200.1 which states, in part: . . . Improper Payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (i) Incorrect amounts are overpayments or underpayments that are made to eligible recipients (including inappropriate denials of payment or service, any payment that does not account for credit for applicable discounts, payments that are for an incorrect amount, and duplicate payments). An improper payment also includes any payment that was made to an ineligible recipient or for an ineligible good or service, or payments for goods or services not received (except for such payments authorized by law). ? The Department of Labor?s Unemployment Insurance Program Letter (UIPL) No. 23-20 provides additional guidance to states regarding program integrity for the regular UI program and for the UI programs authorized by the CARES Act, enacted on March 27, 2020. UIPL 23-20, (4)(b) Program integrity functions for the regular UI programs and CARES Act programs states, in part: . . . The following BPC [Benefit Payment Control] activities are mandatory for states to implement for the regular UI programs on an ongoing basis. States must implement these functions for the PEUC [Pandemic Emergency Unemployment Compensation] and PUA [Pandemic Unemployment Assistance] programs in the same manner as for the regular UI programs. ? National Directory of New Hires Cross-match (UIPL Nos. 13-19 and 19-11). UIPL 13-19 provides detailed, recommended operating procedures for crossmatching with state and national directories of new hire data; ? Quarterly Wage Records Cross-match (20 CFR ? 603.23); and ? Systematic Alien Verification for Entitlement (SAVE) (Section 1137(d) of the Social Security Act (SSA) (42 U.S.C. ?1320b-7). The Department [of Labor] strongly recommends the following additional BPC activities as part of a state?s effective BPC operation for the regular UI programs, PUA, and PEUC: ? State Directory of New Hires Cross-match; ? Social Security Administration (SSA) Cross-match; ? Interstate Benefits (IB) Cross-match; ? State Identification Inquiry (SID) and IB8606 enhancements made to the Interstate Connection (ICON) network cross match to prevent concurrent claim filing in multiple states; ? State Information Data Exchange System (SIDES) (Training and Employment Notice No. 12-16); ? Identity Verification; ? Incarceration Cross-match; and ? UI Integrity Center?s Integrity Data Hub (IDH) tools including the Suspicious Actor Repository (SAR), Suspicious E-Mail Domains, Multi-State Cross-Match (MSCM), Foreign Internet Protocol (IP) Address Detection, and Fraud Alert application. It is management?s responsibility to reasonably ensure control procedures are in place and operating effectively to prevent benefits from being paid to individuals who do not meet the eligibility requirements for the UI program. During state fiscal year (SFY) 2022, the Department disbursed more than $1.69 billion in Unemployment benefits. Approximately $476.7 million of the total disbursed related to pandemic Unemployment benefit payments issued through the uFACTS system and $1.21 billion of the total disbursed related to regular Unemployment benefit payments issued through the Ohio Job Insurance (OJI) system. The Department implemented the BPC cross-matches for the pandemic Unemployment benefit payments in uFACTS, as required by UIPL 23-30, in February 2021 for the Innovate Ohio matches (e.g, Death, Inmate, Nursing Home, and State Employee) and May 2021 for the SSA cross-matches. In addition, the Department implemented the cross-matches for SSA and Incarceration in OJI in May 2021. In response to the COVID-19 pandemic, the Department implemented Lexis Nexis (uFACTS) and Experian (OJI) ID verification tools in late March/early April 2021; both of which factor in death when performing ID verification protocols. The Department receives death data from the Ohio Department of Health and incarceration data from the Ohio Department of Rehabilitation and Correction on a weekly basis. Cross-matches with this data are performed using the Department?s online dashboard based on default settings. The results of these cross-matches are displayed on the dashboard, which the Department?s Benefit Payment Control section staff are tasked with reviewing. However, a point in time results file that can be saved or archived for future review is not generated. Information contained in the dashboard is dynamic and is updated constantly as new data is received. No documentation was available to evidence a review process or any actions taken as a result of the dashboard cross-matches. An analysis of Unemployment benefits paid during SFY 2022 compared to data files received from the Ohio Department of Health and the Ohio Department of Rehabilitation and Correction identified $2,169,454 in benefits paid to individuals who were either deceased or incarcerated prior to the benefit week ending date associated with the benefit payments, as detailed below. Deceased Prior to Benefit Week Ending Date: ? 258 weekly claims transactions relating to 47 individual claimants, totaling $75,313 from the uFACTS system. ? 114 weekly claims transactions relating to 27 individual claimants, totaling $38,924 from the OJI system. Incarcerated Prior to Benefit Week Ending Date: The incarceration file utilized in this analysis was for the period of 3/1/2020 through 2/28/21; we were unable to obtain an incarceration file for SFY 2022 containing inmate social security numbers, a data element critical to the performance of our analysis. Therefore, the file utilized did not include individuals incarcerated, or take into account those who received early release after 2/28/21. Our analysis compared the OJI and uFACTS claims paid during SFY 2022 to the incarceration file. This comparison identified Unemployment benefits paid to individuals during SFY 2022 where the benefit week ending date was after their incarceration date and before their expected release date. These results did not exclude partial eligibility where the date of death or incarceration occurred in the benefit week. ? 5,717 weekly claims transactions relating to 303 individual claimants, totaling $1,992,919 from the uFACTS system. ? 239 weekly claims transactions relating to 16 individual claimants, totaling $62,298 from the OJI system. As such, we will question all benefit payments made to individuals who were either deceased or incarcerated prior to the benefit week ending date, totaling $2,169,454. Anomalies in the date and name fields contained in the OJI and uFACTS files provided by the Department, the social security number field being limited to the last four digits in the death file provided by the Ohio Department of Health, the unavailability of an updated incarceration file from the Ohio Department of Rehabilitation and Correction, and variables in the date fields contained in the incarceration file utilized limited our ability to place a high level of reliance on the completeness and accuracy of the above mentioned results. However, these results indicate the controls included in the system are not working effectively, resulting in unallowable payments to ineligible recipients. Without effective internal control procedures and cross-matching against reliable death records or incarcerated data prior to payment, there is an increased risk that inaccurate or unallowable benefit payments will be made. Overpayments to ineligible claimants may subject the Department to penalties or sanctions from the federal grantor agency which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. We recommend the Department evaluate and strengthen current cross-matching internal control procedures, including those related to deceased and incarcerated individuals, to help identify potential ineligible individuals prior to making payments. These internal controls should formally define the frequency of review, the expected output/results file, and a process to investigate, document, track, and maintain documentation related to any actions taken as a result of the cross-match. Working with the Ohio Department of Health and the Ohio Department of Rehabilitation and Correction will be required to obtain reliable death and incarceration records. We further recommend the Department perform procedures to identify improper payments already made to deceased and incarcerated individuals and seek recovery, reimbursement, or offset future benefits, where necessary.
UNEMPLOYMENT INSURANCE ? FRAUD ISSUES AND OVERPAYMENTS Finding Number: 2022-012 State Agency Number: JFS-04 Assistance Listing Number and Title: 17.225 ? Unemployment Insurance 17.225 COVID-19 ? Unemployment Insurance Federal Award Identification Number / Year: UI-34078-20-55-A-39 / 2020 UI-35668-21-55-A-39 / 2021 UI-37243-22-55-A-39 / 2022 Federal Agency: Department of Labor Compliance Requirement: Special Tests and Provisions ? UI Program Integrity ? Overpayments Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-012 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-009 and 2022-010 detail questioned costs, noncompliance, and weaknesses in internal control related to the regular and pandemic Unemployment Insurance programs regarding fraud issues and overpayments. These findings are integral to and should be read in conjunction with this finding. The U.S. Department of Labor?s (DOL) Unemployment Program Insurance Letter (UIPL) No. 23-20 provides additional guidance to states regarding program integrity for the regular UI program and for the UI programs authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. UIPL 23-20, (4)(b) Program integrity functions for the regular UI programs and CARES Act programs, states, in part: ? The following BPC [Benefit Payment Control] activities are mandatory for states to implement for the regular UI programs on an ongoing basis. States must implement these functions for the Pandemic Emergency Unemployment Compensation (PEUC) and PUA [Pandemic Unemployment Assistance] programs in the same manner as for the regular UI programs. ? National Directory of New Hires Cross-match (UIPL Nos. 13-19 and 19-11). UIPL 13-19 provides detailed, recommended operating procedures for cross-matching with state and national directories of new hire data; ? Quarterly Wage Records Cross-match (20 CFR Section 603.23); and ? Systematic Alien Verification for Entitlement (SAVE) (Section 1137(d) of the Social Security Act (SSA) (42 U.S.C. Section1320b-7). The Department strongly recommends the following additional BPC activities as part of a state?s effective BPC operation for the regular UI programs, PUA and PEUC: ? State Directory of New Hires Cross-match; ? Social Security Administration (SSA) Cross-match; ? Interstate Benefits (IB) Cross-match; ? State Identification Inquiry (SID) and IB8606 enhancements made to the Interstate Connection (ICON) network cross match to prevent concurrent claim filing in multiple states; ? State Information Data Exchange System (SIDES); ? Identity Verification; ? Incarceration Cross-match; and, ? UI Integrity Center?s Integrity Data Hub (IDH) tools including Suspicious Actor Repository (SAR), Suspicious E-Mail Domains, Multi-State Cross-Match (MSCM), Foreign Internet Protocol (IP) Address Detection, and Fraud Alert application. 20 C.F.R. ? 625.14 pertaining to overpayments and disqualifications for fraud states, in part: . . . (h) Fraud Detection and prevention. Provisions in the procedures of each State with respect to detection and prevention of fraudulent overpayments of DUA [Disaster Unemployment Assistance] shall be, as a minimum, commensurate with the procedures adopted by the State with respect to regular compensation and consistent with the Secretary's ?Standard for Fraud and Overpayment Detection,? . . . UIPL No. 2-12, Change 1 provides additional guidance to states regarding program integrity for the regular UI program and amendments made by the Trade Adjustment Assistance Extension Act of 2011 (TAAEA) and states, in part: a. Require states to impose a monetary penalty (an amount not less than 15 percent of the erroneous payment) on claimants whose fraudulent acts resulted in overpayments; b. Prohibit states from providing relief from charges to an employer?s UC [Unemployment Compensation] account when a UC overpayment results from an employer (or an employer?s agent) failing to respond timely or adequately to a request for information by the state agency (i.e., employer or agent at fault), and, at minimum, the employer (or its agent) has established a pattern of failing to respond to such requests; and . . . Ohio Rev. Code ? 4141.35 states, in part: (A) If the director of job and family services finds that any fraudulent misrepresentation has been made by an applicant for or a recipient of benefits with the object of obtaining benefits to which the applicant or recipient was not entitled, and in addition to any other penalty or forfeiture under this chapter, then the director: (1) Shall within four years after the end of the benefit year in which the fraudulent misrepresentation was made reject or cancel such person's entire weekly claim for benefits that was fraudulently claimed, or the person's entire benefit rights if the misrepresentation was in connection with the filing of the claimant's application for determination of benefit rights; (2) Shall by order declare that, for each application for benefit rights and for each weekly claim canceled, such person shall be ineligible for two otherwise valid weekly claims for benefits, claimed within six years subsequent to the discovery of such misrepresentation; (3) By order shall require that the total amount of benefits rejected or canceled under division (A)(1) of this section be repaid to the director before such person may become eligible for further benefits, and shall withhold such unpaid sums from future benefit payments accruing and otherwise payable to such claimant. . . . (B) If the director finds that an applicant for benefits has been credited with a waiting period or paid benefits to which the applicant was not entitled for reasons other than fraudulent misrepresentation, the director shall: (1)(a) Within six months after the determination under which the claimant was credited with that waiting period or paid benefits becomes final pursuant to section 4141.28 of the Revised Code, or within three years after the end of the benefit year in which such benefits were claimed, whichever is later, by order cancel such waiting period and require that such benefits be repaid to the director or be withheld from any benefits to which such applicant is or may become entitled before any additional benefits are paid, provided that the repayment or withholding shall not be required where the overpayment is the result of the director's correcting a prior decision due to a typographical or clerical error in the director's prior decision, or an error in an employer's report under division (G) of section 4141.28 of the Revised Code. . . . Any overpayments made to the individual that have not previously been recovered under an unemployment benefit program of the United States may be recovered in accordance with section 303(g) of the "Social Security Act" and sections 3304(a)(4) and 3306(f) of the "Federal Unemployment Tax Act," 53 Stat. 183 (1939), 26 U.S.C.A. 3301 to 3311. . . . Ohio Rev. Code ? 131.02(A) states, in part: . . . if the amount is not paid within forty-five days after payment is due, the officer, employee, or agent shall certify the amount due to the attorney general, in the form and manner prescribed by the attorney general, and notify the director of budget and management thereof. . . . . UIPL No. 20-21 provides States instructions for assessing fraud penalties and processing overpayment waivers under the CARES Act, as amended. States must establish eligibility criteria for PUA, Federal Pandemic Unemployment Compensation (FPUC), Mixed Earners Unemployment Compensation (MEUC), and PEUC. In general, States are permitted to waive repayment if the overpayment identified was not the claimant's fault and the payment would be contrary to equity and good conscience. In addition, UIPL 20-21 states, in part: Application of a minimum 15 percent monetary penalty. Within the context of the CARES Act, states must apply a minimum 15 percent monetary penalty to an individual?s overpayment when the state determines that such an overpayment was made to an individual due to fraud. Fraud includes instances where an individual knowingly has made, or caused to be made by another, a false statement or representation of a material fact, or knowingly has failed, or caused another to fail, to disclose a material fact. This fraud penalty is applicable to PUA, FPUC, MEUC, PEUC, and the first week of regular UC that is reimbursed in accordance with Section 2105 of the CARES Act? States must apply the fraud monetary penalty for FPUC, MEUC, PEUC, and the first week of regular UC that is reimbursed in accordance with Section 2105 of the CARES Act for all fraud overpayments established on or after the date of publication for this UIPL [May 5, 2021]. It is management?s responsibility to design and implement internal control procedures to ensure compliance with UI program requirements outlined in the federal rules, regulations, and guidance, as well as state laws that govern the program. During state fiscal year (SFY) 2022, the Department disbursed approximately $1.69 billion in UI benefits processed through the Ohio Job Insurance (OJI) and uFACTS systems for the regular Unemployment and pandemic Unemployment programs. The OJI and uFACTS systems automatically generate the cross-match reports as required per UIPL No. 23-20; however, due to the COVID-19 pandemic, the Department had a significant backlog of potential overpayment issues during the audit period causing significant delays in processing time. An issue is created when the system cannot determine the impact of the benefit claim or is created based off of cross-matches. Issues suspected of fraud are forwarded to the Department?s Bureau of Payment Control to be investigated and then adjudicated. An Adjudicator reviews information, known as fact-finding, to make a determination on the benefit claim within 21-days per the Department?s Unemployment Compensation Policy Guide which is based on /a CORE Measure established by the DOL related to timeliness of the nonmonetary determinations for States. Once a determination is made, a Determination Notice or Notice of Overpayment is sent to the claimant. Due to the COVID-19 pandemic, the Department experienced a significant increase in the number of weekly unemployment benefit claims issued through the OJI and uFACTS systems (2,982,414 and 2,260,024, respectively during the year) which had a direct impact on the increase of fraud issues detected. The Department adjudicated 18,314 fraudulent claims for OJI and 293,781 fraudulent claims for uFACTS during SFY 2022. However, the process and/or requirements were not consistently followed, as noted below: ? Of the 25 OJI adjudicated fraud issues selected for testing: - 22 (88%) Notice of Determination/Notice of Overpayments were not issued within 21-days. Days late between the issue determination date and the Notice of Determination/Notice of Overpayment, ranged from 10 to 639 days, for an average of 232 days late. Three of these claims also had payments issued for the claim more than 21 days after the issue determination date. - 12 (48%) were not detected/flagged timely (30 days based on auditor?s judgement) from the benefit week ending date. Days late between the benefit week ending date and the date of issue, ranged from four to 487 days, for an average of 215 days late. - Nine (36%) were not sent the fact-finding questionnaire timely (seven days from the issue determination date based on auditor?s judgement). Days late between the issue determination date and the fact-finding ranged from 20 to 494 days, for an average of 158 days late. ? Of the 25 uFACTS adjudicated fraud issues selected for testing: - 16 (64%) Notice of Determination/Notice of Overpayments were not issued within 21-days. Days late between the issue determination date and the Notice of Determination/Notice of Overpayment ranged from 64 to 379 days, for an average of 196 days late. - 14 (56%) were not detected/flagged timely (30 days based on auditor?s judgement) from the benefit week ending date. Days late between the benefit week ending date and the date of issue ranged from 89 to 578 days, for an average of 334 days late. - Two (8%) were not sent the fact-finding questionnaire timely (seven days from the issue determination date based on auditor?s judgment). Days late between the issue determination date and the fact-finding were three and eight days, for an average of six days late. - Two (8%) did not have a stop payment completed timely (seven days from the issue determination date based on auditor's judgment). Days late between the issue determination date and the last paid claim were 180 and 366 days, for an average of 273 days late. Once an issue has been adjudicated, the Department?s Bureau of Payment Control is responsible for determining the claimant?s benefit overpayment and issues a Notice of Overpayment. Overpayments are benefits paid to individuals who are not legally entitled to receive these benefits. Losses through embezzlement or by theft, other than through the benefit payment process, are not counted as overpayments. Overpayments are reported to the DOL in the quarter and/or month in which they occur, which is once adjudication is complete. A fraud overpayment occurs when the material facts related to a determination or payment of a claim are found during the adjudication process to be knowingly misrepresented or concealed (i.e., willful misrepresentation) by the claimant in order to obtain benefits to which the individual is not legally entitled. A non-fraud overpayment occurs when the state agency determines, through adjudication, the overpayment is not due to willful misrepresentations. Non-fraud overpayments result from reversals, state agency errors, employer errors, and claimant errors. The Department reported approximately $598.2 million in fraudulent outstanding overpayments and $2.17 billion in non-fraudulent outstanding overpayments processed through OJI and uFACTS to the DOL as of June 30, 2022. If overpayments are based on fraud, the OJI and uFACTS systems are to automatically include a 15% penalty, as required by UPIL No. 20-21. The Department then notifies the claimant of the monetary penalties, attempts to collect the penalties, and deposits the penalties collected into the State?s Unemployment Trust Fund. Although the Department appropriately assessed a 15% monetary penalty for PUA and FPUC claims processed through uFACTS during SFY 2022, the Department did not assess the 15% monetary penalty for any FPUC overpayments processed through the OJI system. The Department attempts to collect overpayments by sending an appealable overpayment determination to the claimant. If repayment is not received within 45 days after the payment is due, the amount is certified to the Ohio Attorney General for collection pursuant to Ohio Rev. Code ?131.02. The federal government gave discretion to states to waive the need for a repayment of pandemic funding related to non-fraud overpayments, but claimants must request the waiver from the Department to avoid repayment. During SFY 2022, the Department processed 111,697 overpayment waiver requests and waived repayment of approximately $172.6 million based on approved claimant requests or other waivers. During SFY 2022, the Department certified the fraud and non-fraud overpayments processed through OJI to the Ohio Attorney General for collection; however, the Department only certified 1,000 overpayments processed through uFACTS, totaling $59,526, to the Ohio Attorney General for collection based on its manual process. The Department determined the manual process was too labor intensive and stopped certifying uFACTS overpayments to the Ohio Attorney General for collection until an automated process was developed and implemented in October 2022, after the end of the audit period. Additionally, the Department has flagged approximately $1.08 billion in potential overpayments for the regular Unemployment and the pandemic Unemployment programs as of June 30, 2022. Despite being flagged as potential overpayments, a final determination as to whether these are overpayments and/or fraudulent cannot be made until these claims are fully adjudicated. Without proper controls to ensure the timely identification of fraud issues and the adjudication of fraudulent and non-fraudulent issues and overpayment determinations (if applicable), the Department increases the risk of inaccurate or incomplete financial and/or programmatic activity being reported to the federal grantor agency. Furthermore, the Department is limiting the amount of funding available for program activities by not certifying and pursuing collection of the Unemployment benefit overpayments for the pandemic Unemployment programs, as well as by not properly assessing the monetary penalty to fraudulent FPUC claims processed through OJI. Based on discussions with management, these errors are due to the amount of time and effort necessary to adjudicate fraud and process the high volume of backlog of claims and potential overpayments, time necessary to implement system improvements, and oversight. We recommend the Department continue to evaluate, strengthen, and monitor internal controls and procedures related to UI fraud and overpayments to ensure they are working as management intended, including, but not limited to: ? Periodic management reviews of the cross-match documentation to ensure the matches are being performed timely and as intended. If the information necessary to complete the cross-matches is obtained from an outside party, the Department should work with the entity to ensure the information is obtained timely. Additionally, the Department should continue to prioritize issues based on the aging of issues created by the cross-matches, monitor the issue backlog, ensure issues are being addressed timely, and the Notices of Determination are issued in a timely manner. ? Periodic management reviews over the timing of the fact-finding questionnaires generated by the OJI and/or uFACTS systems once an issue has been created. ? Periodic management reviews over the certification of OJI and uFACTS overpayments to the Ohio Attorney General and subsequent collections. ? System enhancements within OJI to ensure the monetary fraud overpayment penalty amounts are being applied to each applicable overpayment. Management should monitor the system enhancements to ensure they are being captured, properly applied, and appropriately collected.
UNEMPLOYMENT INSURANCE ? DEATH FILE AND INCARCERATION CROSS-MATCHES Finding Number: 2022-009 State Agency Number: JFS-01 Assistance Listing Number and Title: 17.225 ? Unemployment Insurance 17.225 COVID-19 ? Unemployment Insurance Federal Award Identification Number / Year: UI-32619-19-55-A-39 / 2019 UI-34078-20-55-A-39 / 2020 UI-35668-21-55-A-39 / 2021 UI-37243-22-55-A-39 / 2022 Federal Agency: Department of Labor Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Costs Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-011 QUESTIONED COSTS AND SIGNIFICANT DEFICIENCY NOTE: Finding numbers 2022-010 and 2022-012 detail questioned costs, noncompliance, and weaknesses in internal control related to the regular and pandemic Unemployment Insurance programs regarding fraud issues and overpayments. These findings are integral to and should be read in conjunction with this finding. 2 C.F.R. ? 2900.4 gives regulatory effect to the Department of Labor for 2 C.F.R. ? 200.1 which states, in part: . . . Improper Payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (i) Incorrect amounts are overpayments or underpayments that are made to eligible recipients (including inappropriate denials of payment or service, any payment that does not account for credit for applicable discounts, payments that are for an incorrect amount, and duplicate payments). An improper payment also includes any payment that was made to an ineligible recipient or for an ineligible good or service, or payments for goods or services not received (except for such payments authorized by law). ? The Department of Labor?s Unemployment Insurance Program Letter (UIPL) No. 23-20 provides additional guidance to states regarding program integrity for the regular UI program and for the UI programs authorized by the CARES Act, enacted on March 27, 2020. UIPL 23-20, (4)(b) Program integrity functions for the regular UI programs and CARES Act programs states, in part: . . . The following BPC [Benefit Payment Control] activities are mandatory for states to implement for the regular UI programs on an ongoing basis. States must implement these functions for the PEUC [Pandemic Emergency Unemployment Compensation] and PUA [Pandemic Unemployment Assistance] programs in the same manner as for the regular UI programs. ? National Directory of New Hires Cross-match (UIPL Nos. 13-19 and 19-11). UIPL 13-19 provides detailed, recommended operating procedures for crossmatching with state and national directories of new hire data; ? Quarterly Wage Records Cross-match (20 CFR ? 603.23); and ? Systematic Alien Verification for Entitlement (SAVE) (Section 1137(d) of the Social Security Act (SSA) (42 U.S.C. ?1320b-7). The Department [of Labor] strongly recommends the following additional BPC activities as part of a state?s effective BPC operation for the regular UI programs, PUA, and PEUC: ? State Directory of New Hires Cross-match; ? Social Security Administration (SSA) Cross-match; ? Interstate Benefits (IB) Cross-match; ? State Identification Inquiry (SID) and IB8606 enhancements made to the Interstate Connection (ICON) network cross match to prevent concurrent claim filing in multiple states; ? State Information Data Exchange System (SIDES) (Training and Employment Notice No. 12-16); ? Identity Verification; ? Incarceration Cross-match; and ? UI Integrity Center?s Integrity Data Hub (IDH) tools including the Suspicious Actor Repository (SAR), Suspicious E-Mail Domains, Multi-State Cross-Match (MSCM), Foreign Internet Protocol (IP) Address Detection, and Fraud Alert application. It is management?s responsibility to reasonably ensure control procedures are in place and operating effectively to prevent benefits from being paid to individuals who do not meet the eligibility requirements for the UI program. During state fiscal year (SFY) 2022, the Department disbursed more than $1.69 billion in Unemployment benefits. Approximately $476.7 million of the total disbursed related to pandemic Unemployment benefit payments issued through the uFACTS system and $1.21 billion of the total disbursed related to regular Unemployment benefit payments issued through the Ohio Job Insurance (OJI) system. The Department implemented the BPC cross-matches for the pandemic Unemployment benefit payments in uFACTS, as required by UIPL 23-30, in February 2021 for the Innovate Ohio matches (e.g, Death, Inmate, Nursing Home, and State Employee) and May 2021 for the SSA cross-matches. In addition, the Department implemented the cross-matches for SSA and Incarceration in OJI in May 2021. In response to the COVID-19 pandemic, the Department implemented Lexis Nexis (uFACTS) and Experian (OJI) ID verification tools in late March/early April 2021; both of which factor in death when performing ID verification protocols. The Department receives death data from the Ohio Department of Health and incarceration data from the Ohio Department of Rehabilitation and Correction on a weekly basis. Cross-matches with this data are performed using the Department?s online dashboard based on default settings. The results of these cross-matches are displayed on the dashboard, which the Department?s Benefit Payment Control section staff are tasked with reviewing. However, a point in time results file that can be saved or archived for future review is not generated. Information contained in the dashboard is dynamic and is updated constantly as new data is received. No documentation was available to evidence a review process or any actions taken as a result of the dashboard cross-matches. An analysis of Unemployment benefits paid during SFY 2022 compared to data files received from the Ohio Department of Health and the Ohio Department of Rehabilitation and Correction identified $2,169,454 in benefits paid to individuals who were either deceased or incarcerated prior to the benefit week ending date associated with the benefit payments, as detailed below. Deceased Prior to Benefit Week Ending Date: ? 258 weekly claims transactions relating to 47 individual claimants, totaling $75,313 from the uFACTS system. ? 114 weekly claims transactions relating to 27 individual claimants, totaling $38,924 from the OJI system. Incarcerated Prior to Benefit Week Ending Date: The incarceration file utilized in this analysis was for the period of 3/1/2020 through 2/28/21; we were unable to obtain an incarceration file for SFY 2022 containing inmate social security numbers, a data element critical to the performance of our analysis. Therefore, the file utilized did not include individuals incarcerated, or take into account those who received early release after 2/28/21. Our analysis compared the OJI and uFACTS claims paid during SFY 2022 to the incarceration file. This comparison identified Unemployment benefits paid to individuals during SFY 2022 where the benefit week ending date was after their incarceration date and before their expected release date. These results did not exclude partial eligibility where the date of death or incarceration occurred in the benefit week. ? 5,717 weekly claims transactions relating to 303 individual claimants, totaling $1,992,919 from the uFACTS system. ? 239 weekly claims transactions relating to 16 individual claimants, totaling $62,298 from the OJI system. As such, we will question all benefit payments made to individuals who were either deceased or incarcerated prior to the benefit week ending date, totaling $2,169,454. Anomalies in the date and name fields contained in the OJI and uFACTS files provided by the Department, the social security number field being limited to the last four digits in the death file provided by the Ohio Department of Health, the unavailability of an updated incarceration file from the Ohio Department of Rehabilitation and Correction, and variables in the date fields contained in the incarceration file utilized limited our ability to place a high level of reliance on the completeness and accuracy of the above mentioned results. However, these results indicate the controls included in the system are not working effectively, resulting in unallowable payments to ineligible recipients. Without effective internal control procedures and cross-matching against reliable death records or incarcerated data prior to payment, there is an increased risk that inaccurate or unallowable benefit payments will be made. Overpayments to ineligible claimants may subject the Department to penalties or sanctions from the federal grantor agency which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. We recommend the Department evaluate and strengthen current cross-matching internal control procedures, including those related to deceased and incarcerated individuals, to help identify potential ineligible individuals prior to making payments. These internal controls should formally define the frequency of review, the expected output/results file, and a process to investigate, document, track, and maintain documentation related to any actions taken as a result of the cross-match. Working with the Ohio Department of Health and the Ohio Department of Rehabilitation and Correction will be required to obtain reliable death and incarceration records. We further recommend the Department perform procedures to identify improper payments already made to deceased and incarcerated individuals and seek recovery, reimbursement, or offset future benefits, where necessary.
UNEMPLOYMENT INSURANCE ? PANDEMIC UNEMPLOYMENT ASSISTANCE AND FEDERAL PANDEMIC UNEMPLOYMENT COMPENSATION Finding Number: 2022-010 State Agency Number: JFS-02 Assistance Listing Number and Title: 17.225 COVID-19 ? Unemployment Insurance Federal Award Identification Number / Year: UI-32619-19-55-A-39 / 2019 UI-34078-20-55-A-39 / 2020 UI-35668-21-55-A-39 / 2021 UI-37243-22-55-A-39 / 2022 Federal Agency: Department of Labor Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Costs Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-009 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-009 and 2022-012 detail questioned costs, noncompliance, and weaknesses in internal control related to the regular and pandemic Unemployment Insurance programs regarding fraud issues and overpayments. These findings are integral to and should be read in conjunction with this finding. 15 U.S.C. ? 9021 pertaining to PUA, states, in part: (a) Definitions (3) Covered Individual The term ?covered individual? ? (A) means an individual who ? (i) is not eligible for regular compensation or extended benefits under State or Federal law or pandemic emergency unemployment compensation under section 9025 of this title, including an individual who has exhausted all rights to regular unemployment or extended benefits under State or Federal law or pandemic emergency unemployment compensation under section 9025 of this title; ? . . . (c) Applicability (1) In general Except as provided in paragraph (2), the assistance authorized under subsection (b) shall be available to a covered individual? (A) for weeks of unemployment, partial unemployment, or inability to work caused by COVID?19 ? (i) beginning on or after January 27, 2020; and (ii) ending on or before September 6, 2021; and (B) subject to subparagraph (A)(ii), as long as the covered individual?s unemployment, partial unemployment, or inability to work caused by COVID?19 continues. (2) Limitation on duration of assistance The total number of weeks for which a covered individual may receive assistance under this section shall not exceed 79 weeks and such total shall include any week for which the covered individual received regular compensation or extended benefits under any Federal or State law, except that if after March 27, 2020, the duration of extended benefits is extended, the 79-week period described in this paragraph shall be extended by the number of weeks that is equal to the number of weeks by which the extended benefits were extended. . . . (d) Amount of Assistance . . . (A) (i) the weekly benefit amount authorized under the unemployment compensation law of the State where the covered individual was employed, except that the amount may not be less than the minimum weekly benefit amount described in section 625.6 of title 20, Code of Federal Regulations, or any successor thereto; and (ii) ending on or before September 6, 2021; and (ii) the amount of Federal Pandemic Unemployment Compensation [FPUC] under section 9023 of this title; ? . . . (h) Relationship between pandemic unemployment assistance and disaster unemployment assistance [DUA] Except otherwise provided in this section or to the extent there is a conflict between this section and section?625 of title 20, Code of Federal Regulations, such section?625 shall apply to this section as if: (1) the term ?COVID?19 public health emergency? were substituted for the term ?major disaster? each place it appears in such section?625; and (2) the term ?pandemic? were substituted for the term ?disaster? each place it appears in such section? 625. . . . 15 U.S.C. ? 9023(3) pertaining to FPUC states, in part: (A) In general The amount specified in this paragraph is the following amount: (i) For weeks of unemployment beginning after the date on which an agreement is entered into under this section and ending on or before July 31, 2020, $600. (ii) For weeks of unemployment beginning after December 26, 2020 (or, if later, the date on which such agreement is entered into), and ending on or before September 6, 2021, $300. . . . 20 C.F.R. ? 625.6, pertaining to the weekly amount states, in part: . . . (e) . . . An immediate determination of a weekly amount shall also be made where, in conjunction with the filing of an initial application for DUA, the individual submits documentation substantiating employment or self-employment and wages earned or paid for such employment or self-employment, or, in the absence of documentation, where any State agency records of employment or self-employment and wages earned or paid for such employment or self-employment, justify the determination of a weekly amount. . . . (1) In the case of a weekly amount determined in accordance with paragraph (e) of this section, based only on the individual's statement of earnings, the individual shall furnish documentation to substantiate the employment or self-employment or wages earned from or paid for such employment or self-employment or documentation to support that the individual was to commence employment or self-employment on or after the date the major disaster began. In either case, documentation shall be submitted within 21 calendar days of the filing of the initial application for DUA. (2) Any individual who fails to submit documentation to substantiate employment or self-employment or the planned commencement of employment or self-employment in accordance with paragraph (e)(1) of this section, shall be determined ineligible for the payment of DUA for any week of unemployment due to the disaster. Any weeks for which DUA was already paid on the application prior to the date of the determination of ineligibility under this paragraph (e)(2) are overpaid and a determination shall be issued in accordance with ? 625.14(a). In addition, the State agency shall consider whether the individual is subject to a disqualification for fraud in accordance with the provisions set forth in ? 625.14(i). . . . The federal government established rules, regulations, and requirements related to eligibility, benefit amounts and timing, monitoring responsibilities, etc. regarding the expanded Unemployment benefits related to the pandemic. It is management?s responsibility to implement controls, processes, and procedures to provide reasonable assurance over the reliability of financial reporting, effectiveness and efficiency of operations, and compliance with these rules, regulations, and requirements. The COVID-19 Pandemic presented the Department with many challenges and obstacles including a sharp increase in the volume of unemployment claims, the expansion of regular unemployment benefits by the federal government, and the lack of manpower and technology resources. The Department?s legacy unemployment system, Ohio Job Insurance (OJI), has been in place since 2004. The Department indicated that, due to OJI?s age and functionality, it was unable to handle the increased volume of claimants brought on by the pandemic. Therefore, the Department contracted with a service organization for processing of pandemic unemployment benefits and maintaining key functions of the benefit claims processing, which were customized to fit Ohio?s needs (effective May 14, 2020). This outside system, the Unemployment Framework for Automated Claim & Tax Services (uFACTS) system, was used for certain pandemic benefits only and maintained key functions of the benefit claims processing for this activity. Pandemic Unemployment benefits for new claims ended as of September 2021; however, the uFACTS system remains operational so the Department can continue to process the backlog of claims filed before the deadline and adjudicate pending claims flagged for further review. During state fiscal year 2022, the Department disbursed more than $1.69 billion in Unemployment benefits from both OJI and uFACTS. Approximately $476.7 million and $323.8 million related to PUA and FPUC benefits, respectively. The Department also reported to the U.S. Department of Labor outstanding Unemployment Insurance overpayments totaling $2.77 billion as of June 30, 2022. Of these total overpayments, $598.2 million was identified as fraud and $2.17 billion as non-fraud relating to regular unemployment and federal pandemic Unemployment benefits. Approximately $955 million (44%) of the non-fraud overpayments and $221.5 million (37%) of the fraud overpayments were processed through uFACTS. Eligibility for PUA and FPUC was determined within OJI or uFACTS based upon requirements outlined in state and/or federal laws. PUA provided up to a max of 79 weeks of benefits to many who historically have not qualified for unemployment benefits, such as self-employed workers, 1099 tax filers, part-time workers, and those who lack sufficient work history. FPUC provided additional benefits of $600 and/or $300 per week to individuals that qualified for regular unemployment or PUA benefits. Weekly, claimants confirmed their unemployment status and completed the COVID-19 self-attestation questionnaire within uFACTS or OJI. If the claimant?s benefit payment was flagged, an adjudicator performed an additional review and requested fact-finding information for either monetary or nonmonetary issues. The claimant continued to receive weekly benefit payments until the adjudicator investigated the issue and confirmed the claimant?s ineligible status. If an issue was suspected of fraud, the issue was routed to the Department?s Benefit Payment Control section to be investigated, adjudicated and, if applicable, an overpayment flag was created in the related system. The Department?s policy, which is based on U.S. Department of Labor guidance, is to adjudicate possible fraud cases within 21 days or 90 days, depending on the circumstances of the case. Although the Department implemented several additional controls during state fiscal year 2022 related to the pandemic unemployment benefits, the timing of these changes and/or application of the controls did not prevent or detect the following noncompliance errors, resulting in questioned costs totaling $86,076 ($55,836 for PUA and $30,240 for FPUC): ? For one of 60 (1.7%) regular Unemployment benefit payments selected for testing, the claimant was paid FPUC benefits of $300 a week for several weeks of benefits which were already paid in state fiscal year 2021. As a result, we will question all duplicate FPUC payments made to this claimant during the audit period, totaling $4,800. ? For eight of nine (88.9%) regular Unemployment benefit claims identified in an OJI system data match as potentially exceeding the maximum allowable amount per week, the claimants were paid $300 in FPUC benefits twice during the same benefit week. As a result, we will question costs for all FPUC payments over the allowable amount to these claimants during the audit period, totaling $17,640. ? Two of two (100%) PUA claims identified in a uFACTS system data match exceeded the maximum allowable number of weeks (79): one by four weeks and the other by two weeks. As a result, we will question the PUA payments exceeding the maximum allowable number of weeks, totaling $1,656. ? For eight of 60 (13.3%) PUA / FPUC payments selected for testing, the claimant was not eligible to receive benefits for the weeks claimed, was overpaid, or was underpaid, as follows: ? Two claimants were paid weekly benefit amounts exceeding the calculated weekly benefit amount. The Department determined one claimant was eligible for weekly benefits of $480 and the other $582; however, neither claimant's employment verification showed monetary eligibility for more than the minimum weekly benefit amount of $189. As a result, we will question all PUA payments made to these claimants exceeding the minimum weekly benefit amount of $189 during the audit period, totaling $31,650. ? One claimant quit their job for a non-qualifying COVID-19 separation reason and was ineligible for benefits. The regular Unemployment claim was appropriately denied in OJI, but the Department later approved the same separation as a PUA / FPUC claim. The Department determined the claim to be fraudulent in May 2022. As a result, we will question all PUA and FPUC payments made to this claimant during the audit period, totaling $7,182 and $7,800, respectively. ? One claimant was employed full-time the entire claim period and therefore ineligible for benefits. The Department appropriately denied the regular Unemployment claim in OJI but later approved the same separation as a PUA claim. As a result, we will question all PUA payments made to this claimant during the audit period, totaling $11,568. ? For two claims, the Department requested the claimant provide employment verification and the claimant did not respond in 90 days, as required by the Consolidated Appropriations Act. The claimant continued to file Unemployment claims after the 90-day deadline and the Department continued to pay benefits to the claimants until the adjudication date, occurring 28 days after the due date for one claim and 79 days for the other. As a result, we will question all PUA payments made to these claimants during the audit period between the due date for employment verification and the adjudication date, totaling $2,457. ? One claimant was improperly paid PUA benefits for weeks they were eligible for regular Unemployment. As a result, we will question all PUA benefit payments made to this claimant during the audit period for the weeks they were eligible for regular Unemployment, totaling $1,323. ? One claimant was paid a weekly benefit amount less than the calculated weekly benefit amount. The Department determined the claimant was eligible for weekly PUA benefits of $322; however, the employment verification used in the monetary determination showed the claimant was entitled to weekly benefits of $403. As a result, the claimant was underpaid a total of $2,628 PUA benefits during the audit period. Without effective internal controls for the eligibility determination and benefit payment processes, there is an increased risk benefit payments will be inaccurate or unallowable. The risk is increased if the systems contain significant flaws or eligibility redeterminations are not made timely or accurately. Overpayments to ineligible claimants may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, these errors were due to oversight and the significant workload increase because of the impact the pandemic had on the program. We recommend Department management: ? Evaluate and strengthen current internal control procedures over the Unemployment Insurance program to assure claimants are eligible and receive the correct weekly benefits. This should include evaluating the cause of the errors identified above and updating controls as necessary. ? Periodically monitor the established controls to determine if they are working effectively and as intended. ? Perform periodic reviews of the claimant files to reasonably ensure the information is properly maintained and accurately entered into the related systems. ? Evaluate overpayments and/or payments to ineligible claimants and offset future benefits or seek reimbursement, where necessary.
WIOA CLUSTER AND FOSTER CARE ? FEDERAL REPORTING Finding Number: 2022-014 State Agency Number: JFS-06 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.568 ? Foster Care Title IV-E Federal Award Identification Number / Year: AA36339DQ0 / 2021 (WIOA Cluster) 2101OHFOST / 2021 (Foster Care) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ? 75.302 contains the Department of Health and Human Services uniform administrative requirements for grants to state and local governments relating to financial administration and standards for financial management systems. Specifically, 45 C.F.R. ? 75.302 states, in part: (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds. In addition, the state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. (b) The financial management system of each non-Federal entity must provide for the following (see also Sections 75.361, .362, .363, .364, and .365): . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 75.341 and .342? (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . . The Department of Labor implemented similar uniform administrative requirements in 29 C.F.R. ? 97.20 which states, in part: (a) A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to - (1) Permit preparation of reports required by this part and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) The financial management systems of other grantees and sub grantees must meet the following standards: (1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. (2) Accounting records. Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. . . . It is management?s responsibility to implement control policies and procedures to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with program requirements. It is imperative that management be able to provide the underlying data and related program documentation required to prepare and support these reports. The Department?s Bureau of Grants Management and Federal Reporting Services (the Bureau) is responsible for the preparation of various federal financial expenditure reports, including the quarterly Foster Care CB-496 and quarterly WIOA Cluster ETA-9130 reports. The Bureau runs reports from various computer systems, transfers this information to the applicable federal reports, and submits them for a two-level review process prior to submitting them to the federal grantor agency. However, the Bureau?s review of federal reports was not adequate and/or operating effectively. As a result, the following errors were identified in the reports tested during state fiscal year 2022: ? For one of two (50%) quarterly Foster Care CB-496 reports selected for testing (quarter ending September 30, 2021): o The Bureau overstated Line 10a - Current Quarter Claims, Title IV-E Foster Care Candidate Administrative Costs - Case Planning and Management by $2,183 and the federal share for the line by $1,091. The Bureau included an amount that was already properly reported in another line. o The Bureau overstated Line 16a - Demonstration Project Costs by $63,500 and the federal share for the line by $31,750. The Bureau improperly reported the total claim amount as the federal share amount. o The Bureau incorrectly reported a decreasing prior quarter adjustment in Line 5 ? In-Placement Administrative Costs ? Case Planning and Management instead of Line 6 ? In-Placement Administrative Costs ? Eligibility Determinations. This caused line 5 to be understated by $171 and the federal share for the line to be understated by $85. As a result, Line 6 was overstated by the same amounts. ? For one of 15 (6.7%) quarterly WIOA Cluster ETA-9130 reports selected for testing (Statewide Rapid Response for quarter ending March 31, 2022): o The Bureau reported Line 10g - Federal Share of Unliquidated Obligations as $59,668; however, supporting documentation showed the amount to be $44,755, for an overstatement of $14,913. A lack of adequate internal controls over federal reporting increases the risk that reports submitted to the federal grantor agency are inaccurate. If the underlying data for the submitted reports cannot be readily verified, the Department and the federal government may not be reasonably assured the information is accurate and complete. Reporting inaccurate or incomplete information could subject the Department to federal sanctions, limiting the amount of funding for program activities. Based on discussions with management, these errors were due to oversight. We recommend the Department evaluate current procedures and implement additional policies and procedures as necessary to provide reasonable assurance the data being reported for all federal programs is reasonable and accurate and agrees to supporting documentation. The Department should ensure all reports (and any necessary corrections to reports) are reviewed and approved by the appropriate level of management.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
WIOA CLUSTER AND FOSTER CARE ? FEDERAL REPORTING Finding Number: 2022-014 State Agency Number: JFS-06 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.568 ? Foster Care Title IV-E Federal Award Identification Number / Year: AA36339DQ0 / 2021 (WIOA Cluster) 2101OHFOST / 2021 (Foster Care) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ? 75.302 contains the Department of Health and Human Services uniform administrative requirements for grants to state and local governments relating to financial administration and standards for financial management systems. Specifically, 45 C.F.R. ? 75.302 states, in part: (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds. In addition, the state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. (b) The financial management system of each non-Federal entity must provide for the following (see also Sections 75.361, .362, .363, .364, and .365): . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 75.341 and .342? (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . . The Department of Labor implemented similar uniform administrative requirements in 29 C.F.R. ? 97.20 which states, in part: (a) A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to - (1) Permit preparation of reports required by this part and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) The financial management systems of other grantees and sub grantees must meet the following standards: (1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. (2) Accounting records. Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. . . . It is management?s responsibility to implement control policies and procedures to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with program requirements. It is imperative that management be able to provide the underlying data and related program documentation required to prepare and support these reports. The Department?s Bureau of Grants Management and Federal Reporting Services (the Bureau) is responsible for the preparation of various federal financial expenditure reports, including the quarterly Foster Care CB-496 and quarterly WIOA Cluster ETA-9130 reports. The Bureau runs reports from various computer systems, transfers this information to the applicable federal reports, and submits them for a two-level review process prior to submitting them to the federal grantor agency. However, the Bureau?s review of federal reports was not adequate and/or operating effectively. As a result, the following errors were identified in the reports tested during state fiscal year 2022: ? For one of two (50%) quarterly Foster Care CB-496 reports selected for testing (quarter ending September 30, 2021): o The Bureau overstated Line 10a - Current Quarter Claims, Title IV-E Foster Care Candidate Administrative Costs - Case Planning and Management by $2,183 and the federal share for the line by $1,091. The Bureau included an amount that was already properly reported in another line. o The Bureau overstated Line 16a - Demonstration Project Costs by $63,500 and the federal share for the line by $31,750. The Bureau improperly reported the total claim amount as the federal share amount. o The Bureau incorrectly reported a decreasing prior quarter adjustment in Line 5 ? In-Placement Administrative Costs ? Case Planning and Management instead of Line 6 ? In-Placement Administrative Costs ? Eligibility Determinations. This caused line 5 to be understated by $171 and the federal share for the line to be understated by $85. As a result, Line 6 was overstated by the same amounts. ? For one of 15 (6.7%) quarterly WIOA Cluster ETA-9130 reports selected for testing (Statewide Rapid Response for quarter ending March 31, 2022): o The Bureau reported Line 10g - Federal Share of Unliquidated Obligations as $59,668; however, supporting documentation showed the amount to be $44,755, for an overstatement of $14,913. A lack of adequate internal controls over federal reporting increases the risk that reports submitted to the federal grantor agency are inaccurate. If the underlying data for the submitted reports cannot be readily verified, the Department and the federal government may not be reasonably assured the information is accurate and complete. Reporting inaccurate or incomplete information could subject the Department to federal sanctions, limiting the amount of funding for program activities. Based on discussions with management, these errors were due to oversight. We recommend the Department evaluate current procedures and implement additional policies and procedures as necessary to provide reasonable assurance the data being reported for all federal programs is reasonable and accurate and agrees to supporting documentation. The Department should ensure all reports (and any necessary corrections to reports) are reviewed and approved by the appropriate level of management.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
WIOA CLUSTER AND FOSTER CARE ? FEDERAL REPORTING Finding Number: 2022-014 State Agency Number: JFS-06 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.568 ? Foster Care Title IV-E Federal Award Identification Number / Year: AA36339DQ0 / 2021 (WIOA Cluster) 2101OHFOST / 2021 (Foster Care) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ? 75.302 contains the Department of Health and Human Services uniform administrative requirements for grants to state and local governments relating to financial administration and standards for financial management systems. Specifically, 45 C.F.R. ? 75.302 states, in part: (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds. In addition, the state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. (b) The financial management system of each non-Federal entity must provide for the following (see also Sections 75.361, .362, .363, .364, and .365): . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 75.341 and .342? (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . . The Department of Labor implemented similar uniform administrative requirements in 29 C.F.R. ? 97.20 which states, in part: (a) A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to - (1) Permit preparation of reports required by this part and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) The financial management systems of other grantees and sub grantees must meet the following standards: (1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. (2) Accounting records. Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. . . . It is management?s responsibility to implement control policies and procedures to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with program requirements. It is imperative that management be able to provide the underlying data and related program documentation required to prepare and support these reports. The Department?s Bureau of Grants Management and Federal Reporting Services (the Bureau) is responsible for the preparation of various federal financial expenditure reports, including the quarterly Foster Care CB-496 and quarterly WIOA Cluster ETA-9130 reports. The Bureau runs reports from various computer systems, transfers this information to the applicable federal reports, and submits them for a two-level review process prior to submitting them to the federal grantor agency. However, the Bureau?s review of federal reports was not adequate and/or operating effectively. As a result, the following errors were identified in the reports tested during state fiscal year 2022: ? For one of two (50%) quarterly Foster Care CB-496 reports selected for testing (quarter ending September 30, 2021): o The Bureau overstated Line 10a - Current Quarter Claims, Title IV-E Foster Care Candidate Administrative Costs - Case Planning and Management by $2,183 and the federal share for the line by $1,091. The Bureau included an amount that was already properly reported in another line. o The Bureau overstated Line 16a - Demonstration Project Costs by $63,500 and the federal share for the line by $31,750. The Bureau improperly reported the total claim amount as the federal share amount. o The Bureau incorrectly reported a decreasing prior quarter adjustment in Line 5 ? In-Placement Administrative Costs ? Case Planning and Management instead of Line 6 ? In-Placement Administrative Costs ? Eligibility Determinations. This caused line 5 to be understated by $171 and the federal share for the line to be understated by $85. As a result, Line 6 was overstated by the same amounts. ? For one of 15 (6.7%) quarterly WIOA Cluster ETA-9130 reports selected for testing (Statewide Rapid Response for quarter ending March 31, 2022): o The Bureau reported Line 10g - Federal Share of Unliquidated Obligations as $59,668; however, supporting documentation showed the amount to be $44,755, for an overstatement of $14,913. A lack of adequate internal controls over federal reporting increases the risk that reports submitted to the federal grantor agency are inaccurate. If the underlying data for the submitted reports cannot be readily verified, the Department and the federal government may not be reasonably assured the information is accurate and complete. Reporting inaccurate or incomplete information could subject the Department to federal sanctions, limiting the amount of funding for program activities. Based on discussions with management, these errors were due to oversight. We recommend the Department evaluate current procedures and implement additional policies and procedures as necessary to provide reasonable assurance the data being reported for all federal programs is reasonable and accurate and agrees to supporting documentation. The Department should ensure all reports (and any necessary corrections to reports) are reviewed and approved by the appropriate level of management.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? SUBRECIPIENT MONITORING Finding Number: 2022-006 State Agency Number: EDU-01 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 Federal Agency: Department of Education Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 200.332 outlines pass-through entity responsibilities and states, in part, that all pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ? (2) 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 written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. . . . The Department's Office of Federal Programs is responsible for monitoring subrecipients of the Education Stabilization Fund (ESF), including the subprogram, Elementary and Secondary School Emergency Relief (ESSER) Fund. The Office of Federal Programs monitors subrecipient compliance with ESSER program requirements through self-surveys, desk reviews, or on-site reviews based on various risk factors. If noncompliance is identified, the Department requests and reviews the corrective action plan created by the subrecipient. The Office of Federal Programs then performs a follow-up desk review to ensure the subrecipient successfully implemented their corrective action plan. During state fiscal year (SFY) 2022, the Office of Federal Programs identified four noncompliance issues for the ESF ? ESSER program that required corrective action plans. However, for one of two (50%) noncompliance issues selected for testing, the Office of Federal Programs did not obtain a corrective action plan, nor did they perform a follow-up desk review to ensure a corrective action plan was implemented timely and properly. Failure to follow up with subrecipients on noncompliance issues identified through the monitoring process could lead to further noncompliance with federal program regulations, as well as improper use of funding. Based on discussions with management, when the Office of Federal Programs separated the ESSER compliance monitoring out of the Department?s consolidated grants monitoring system into its own individual process at the beginning of SFY 2022, this noncompliance issue which was identified and included in the previous system was missed due to oversight. The Department?s Office of Federal Programs should strengthen existing processes and procedures to ensure that all subrecipients with detected noncompliance issues are properly accounted for in the monitoring records/system. The Department should take measures to ensure each subrecipient with noncompliance issues properly submits a corrective action plan. The Department should then perform a follow-up review to verify the subrecipient has taken timely and appropriate action to address the noncompliance issues identified.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? ANNUAL REPORT Finding Number: 2022-008 State Agency Number: EDU-03 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 S425D210035 / 2021 S425U210035 / 2021 Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS The U.S. Department of Education?s (USED) Office of Elementary and Secondary Education?s website states: All grantees are required to report on Elementary and Secondary School Emergency Relief (ESSER) funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA Act), and the American Rescue Plan (ARP Act). Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Part B(9) of the Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund) between the Department and USED states, in part: ?The Secretary may require additional reporting in the future, which may include: the methodology LEAs [Local Education Agencies] will use to provide services or assistance to students and staff in both public and non-public schools, the uses of funds by the LEAs or other entities and demonstration of their compliance with Section 18003(d) of the CARES Act ... Further, the 2022 U.S. Office of Management and Budget?s Compliance Supplement states, in part: ESSER. . .grantees must submit an annual performance report (OMB No. 1810-0749?) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Per guidance received from USED, the Department was required to submit the annual performance report for the Education Stabilization Fund?s ESSER I, II, and III subprograms between May 31 ? July 1, 2022. The Department submitted the report on July 1, 2022; however, USED noted several errors in the Department?s report and allowed the Department to submit an amended report between August 22 ? September 9, 2022. The Department submitted the amended version on September 8, 2022. Both the original and amended versions of the annual performance report covered the period of October 1, 2020 through June 30, 2021 for ESSER I and the period of July 1, 2020 through June 30, 2021 for ESSER II and ARP ESSER (ESSER III). The Department worked with the Management Council of the Ohio Education Computer Network to create a data portal for each school district to report their ESSER activity. The Department then used this data to compile the annual performance report and upload it into the Data Collection Tool, the application USED established to collect the data. However, while the Department had control procedures in place, they were not sufficient to ensure the completeness and accuracy of the information included in the annual report. In addition, the Department was unable to provide documentation to support the amounts reported. As a result, the total expenditures reported for 23 of 25 school districts selected for testing were not calculated/reported correctly when compared to amounts from the Ohio Administrative Knowledge System (OAKS) Voucher Payment Report, which was the only potential source available for testing. The total expenditures for each ESSER program and the respective variances were as follows: Program # of Schools Tested / # With Errors Total Expenditures per Annual Report Total Expenditures per OAKS Variance ESSER I 8 / 8 $43,313,688 $42,615,001 $698,687 ESSER II 9 / 7 $26,292,636 $13,004,131 $13,288,505 ARP ESSER (III) 8 / 8 $5,390,777 $0 $5,390,777 Totals 25 / 23 $74,997,101 $55,119,132 $19,377,969 Without proper procedures in place to ensure the amounts included in the report are complete and accurate, there is an increased risk that amounts reported to the federal grantor agency are incorrect. Inaccurate reporting could subject the Department to fines or other sanctions imposed by the federal grantor agency. Based on discussions with management, changes to the program requirements throughout the period made it difficult for the Department and the school districts to provide accurate information. In addition, not all school districts understood what time period the annual report was to cover which led to inconsistent data being reported in the portal. We recommend the Department implement policies and procedures to ensure that all amounts reported on the annual report are complete and accurate. These procedures should include formally notifying the school districts what period the data should come from, ensuring the data pulled from the portal is complete and accurate prior to compiling it in the annual report, and reconciling the amounts included in the annual report to information provided by the school districts. We further recommend the Department develop procedures on how to handle adjustments the school districts make to the data.
EDUCATION STABILIZATION FUND ? SUBRECIPIENT MONITORING Finding Number: 2022-006 State Agency Number: EDU-01 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 Federal Agency: Department of Education Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 200.332 outlines pass-through entity responsibilities and states, in part, that all pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ? (2) 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 written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. . . . The Department's Office of Federal Programs is responsible for monitoring subrecipients of the Education Stabilization Fund (ESF), including the subprogram, Elementary and Secondary School Emergency Relief (ESSER) Fund. The Office of Federal Programs monitors subrecipient compliance with ESSER program requirements through self-surveys, desk reviews, or on-site reviews based on various risk factors. If noncompliance is identified, the Department requests and reviews the corrective action plan created by the subrecipient. The Office of Federal Programs then performs a follow-up desk review to ensure the subrecipient successfully implemented their corrective action plan. During state fiscal year (SFY) 2022, the Office of Federal Programs identified four noncompliance issues for the ESF ? ESSER program that required corrective action plans. However, for one of two (50%) noncompliance issues selected for testing, the Office of Federal Programs did not obtain a corrective action plan, nor did they perform a follow-up desk review to ensure a corrective action plan was implemented timely and properly. Failure to follow up with subrecipients on noncompliance issues identified through the monitoring process could lead to further noncompliance with federal program regulations, as well as improper use of funding. Based on discussions with management, when the Office of Federal Programs separated the ESSER compliance monitoring out of the Department?s consolidated grants monitoring system into its own individual process at the beginning of SFY 2022, this noncompliance issue which was identified and included in the previous system was missed due to oversight. The Department?s Office of Federal Programs should strengthen existing processes and procedures to ensure that all subrecipients with detected noncompliance issues are properly accounted for in the monitoring records/system. The Department should take measures to ensure each subrecipient with noncompliance issues properly submits a corrective action plan. The Department should then perform a follow-up review to verify the subrecipient has taken timely and appropriate action to address the noncompliance issues identified.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? ANNUAL REPORT Finding Number: 2022-008 State Agency Number: EDU-03 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 S425D210035 / 2021 S425U210035 / 2021 Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS The U.S. Department of Education?s (USED) Office of Elementary and Secondary Education?s website states: All grantees are required to report on Elementary and Secondary School Emergency Relief (ESSER) funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA Act), and the American Rescue Plan (ARP Act). Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Part B(9) of the Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund) between the Department and USED states, in part: ?The Secretary may require additional reporting in the future, which may include: the methodology LEAs [Local Education Agencies] will use to provide services or assistance to students and staff in both public and non-public schools, the uses of funds by the LEAs or other entities and demonstration of their compliance with Section 18003(d) of the CARES Act ... Further, the 2022 U.S. Office of Management and Budget?s Compliance Supplement states, in part: ESSER. . .grantees must submit an annual performance report (OMB No. 1810-0749?) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Per guidance received from USED, the Department was required to submit the annual performance report for the Education Stabilization Fund?s ESSER I, II, and III subprograms between May 31 ? July 1, 2022. The Department submitted the report on July 1, 2022; however, USED noted several errors in the Department?s report and allowed the Department to submit an amended report between August 22 ? September 9, 2022. The Department submitted the amended version on September 8, 2022. Both the original and amended versions of the annual performance report covered the period of October 1, 2020 through June 30, 2021 for ESSER I and the period of July 1, 2020 through June 30, 2021 for ESSER II and ARP ESSER (ESSER III). The Department worked with the Management Council of the Ohio Education Computer Network to create a data portal for each school district to report their ESSER activity. The Department then used this data to compile the annual performance report and upload it into the Data Collection Tool, the application USED established to collect the data. However, while the Department had control procedures in place, they were not sufficient to ensure the completeness and accuracy of the information included in the annual report. In addition, the Department was unable to provide documentation to support the amounts reported. As a result, the total expenditures reported for 23 of 25 school districts selected for testing were not calculated/reported correctly when compared to amounts from the Ohio Administrative Knowledge System (OAKS) Voucher Payment Report, which was the only potential source available for testing. The total expenditures for each ESSER program and the respective variances were as follows: Program # of Schools Tested / # With Errors Total Expenditures per Annual Report Total Expenditures per OAKS Variance ESSER I 8 / 8 $43,313,688 $42,615,001 $698,687 ESSER II 9 / 7 $26,292,636 $13,004,131 $13,288,505 ARP ESSER (III) 8 / 8 $5,390,777 $0 $5,390,777 Totals 25 / 23 $74,997,101 $55,119,132 $19,377,969 Without proper procedures in place to ensure the amounts included in the report are complete and accurate, there is an increased risk that amounts reported to the federal grantor agency are incorrect. Inaccurate reporting could subject the Department to fines or other sanctions imposed by the federal grantor agency. Based on discussions with management, changes to the program requirements throughout the period made it difficult for the Department and the school districts to provide accurate information. In addition, not all school districts understood what time period the annual report was to cover which led to inconsistent data being reported in the portal. We recommend the Department implement policies and procedures to ensure that all amounts reported on the annual report are complete and accurate. These procedures should include formally notifying the school districts what period the data should come from, ensuring the data pulled from the portal is complete and accurate prior to compiling it in the annual report, and reconciling the amounts included in the annual report to information provided by the school districts. We further recommend the Department develop procedures on how to handle adjustments the school districts make to the data.
EDUCATION STABILIZATION FUND ? SUBRECIPIENT MONITORING Finding Number: 2022-006 State Agency Number: EDU-01 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 Federal Agency: Department of Education Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 200.332 outlines pass-through entity responsibilities and states, in part, that all pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ? (2) 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 written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. . . . The Department's Office of Federal Programs is responsible for monitoring subrecipients of the Education Stabilization Fund (ESF), including the subprogram, Elementary and Secondary School Emergency Relief (ESSER) Fund. The Office of Federal Programs monitors subrecipient compliance with ESSER program requirements through self-surveys, desk reviews, or on-site reviews based on various risk factors. If noncompliance is identified, the Department requests and reviews the corrective action plan created by the subrecipient. The Office of Federal Programs then performs a follow-up desk review to ensure the subrecipient successfully implemented their corrective action plan. During state fiscal year (SFY) 2022, the Office of Federal Programs identified four noncompliance issues for the ESF ? ESSER program that required corrective action plans. However, for one of two (50%) noncompliance issues selected for testing, the Office of Federal Programs did not obtain a corrective action plan, nor did they perform a follow-up desk review to ensure a corrective action plan was implemented timely and properly. Failure to follow up with subrecipients on noncompliance issues identified through the monitoring process could lead to further noncompliance with federal program regulations, as well as improper use of funding. Based on discussions with management, when the Office of Federal Programs separated the ESSER compliance monitoring out of the Department?s consolidated grants monitoring system into its own individual process at the beginning of SFY 2022, this noncompliance issue which was identified and included in the previous system was missed due to oversight. The Department?s Office of Federal Programs should strengthen existing processes and procedures to ensure that all subrecipients with detected noncompliance issues are properly accounted for in the monitoring records/system. The Department should take measures to ensure each subrecipient with noncompliance issues properly submits a corrective action plan. The Department should then perform a follow-up review to verify the subrecipient has taken timely and appropriate action to address the noncompliance issues identified.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? ANNUAL REPORT Finding Number: 2022-008 State Agency Number: EDU-03 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 S425D210035 / 2021 S425U210035 / 2021 Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS The U.S. Department of Education?s (USED) Office of Elementary and Secondary Education?s website states: All grantees are required to report on Elementary and Secondary School Emergency Relief (ESSER) funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA Act), and the American Rescue Plan (ARP Act). Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Part B(9) of the Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund) between the Department and USED states, in part: ?The Secretary may require additional reporting in the future, which may include: the methodology LEAs [Local Education Agencies] will use to provide services or assistance to students and staff in both public and non-public schools, the uses of funds by the LEAs or other entities and demonstration of their compliance with Section 18003(d) of the CARES Act ... Further, the 2022 U.S. Office of Management and Budget?s Compliance Supplement states, in part: ESSER. . .grantees must submit an annual performance report (OMB No. 1810-0749?) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Per guidance received from USED, the Department was required to submit the annual performance report for the Education Stabilization Fund?s ESSER I, II, and III subprograms between May 31 ? July 1, 2022. The Department submitted the report on July 1, 2022; however, USED noted several errors in the Department?s report and allowed the Department to submit an amended report between August 22 ? September 9, 2022. The Department submitted the amended version on September 8, 2022. Both the original and amended versions of the annual performance report covered the period of October 1, 2020 through June 30, 2021 for ESSER I and the period of July 1, 2020 through June 30, 2021 for ESSER II and ARP ESSER (ESSER III). The Department worked with the Management Council of the Ohio Education Computer Network to create a data portal for each school district to report their ESSER activity. The Department then used this data to compile the annual performance report and upload it into the Data Collection Tool, the application USED established to collect the data. However, while the Department had control procedures in place, they were not sufficient to ensure the completeness and accuracy of the information included in the annual report. In addition, the Department was unable to provide documentation to support the amounts reported. As a result, the total expenditures reported for 23 of 25 school districts selected for testing were not calculated/reported correctly when compared to amounts from the Ohio Administrative Knowledge System (OAKS) Voucher Payment Report, which was the only potential source available for testing. The total expenditures for each ESSER program and the respective variances were as follows: Program # of Schools Tested / # With Errors Total Expenditures per Annual Report Total Expenditures per OAKS Variance ESSER I 8 / 8 $43,313,688 $42,615,001 $698,687 ESSER II 9 / 7 $26,292,636 $13,004,131 $13,288,505 ARP ESSER (III) 8 / 8 $5,390,777 $0 $5,390,777 Totals 25 / 23 $74,997,101 $55,119,132 $19,377,969 Without proper procedures in place to ensure the amounts included in the report are complete and accurate, there is an increased risk that amounts reported to the federal grantor agency are incorrect. Inaccurate reporting could subject the Department to fines or other sanctions imposed by the federal grantor agency. Based on discussions with management, changes to the program requirements throughout the period made it difficult for the Department and the school districts to provide accurate information. In addition, not all school districts understood what time period the annual report was to cover which led to inconsistent data being reported in the portal. We recommend the Department implement policies and procedures to ensure that all amounts reported on the annual report are complete and accurate. These procedures should include formally notifying the school districts what period the data should come from, ensuring the data pulled from the portal is complete and accurate prior to compiling it in the annual report, and reconciling the amounts included in the annual report to information provided by the school districts. We further recommend the Department develop procedures on how to handle adjustments the school districts make to the data.
EDUCATION STABILIZATION FUND ? SUBRECIPIENT MONITORING Finding Number: 2022-006 State Agency Number: EDU-01 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 Federal Agency: Department of Education Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 200.332 outlines pass-through entity responsibilities and states, in part, that all pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ? (2) 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 written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. . . . The Department's Office of Federal Programs is responsible for monitoring subrecipients of the Education Stabilization Fund (ESF), including the subprogram, Elementary and Secondary School Emergency Relief (ESSER) Fund. The Office of Federal Programs monitors subrecipient compliance with ESSER program requirements through self-surveys, desk reviews, or on-site reviews based on various risk factors. If noncompliance is identified, the Department requests and reviews the corrective action plan created by the subrecipient. The Office of Federal Programs then performs a follow-up desk review to ensure the subrecipient successfully implemented their corrective action plan. During state fiscal year (SFY) 2022, the Office of Federal Programs identified four noncompliance issues for the ESF ? ESSER program that required corrective action plans. However, for one of two (50%) noncompliance issues selected for testing, the Office of Federal Programs did not obtain a corrective action plan, nor did they perform a follow-up desk review to ensure a corrective action plan was implemented timely and properly. Failure to follow up with subrecipients on noncompliance issues identified through the monitoring process could lead to further noncompliance with federal program regulations, as well as improper use of funding. Based on discussions with management, when the Office of Federal Programs separated the ESSER compliance monitoring out of the Department?s consolidated grants monitoring system into its own individual process at the beginning of SFY 2022, this noncompliance issue which was identified and included in the previous system was missed due to oversight. The Department?s Office of Federal Programs should strengthen existing processes and procedures to ensure that all subrecipients with detected noncompliance issues are properly accounted for in the monitoring records/system. The Department should take measures to ensure each subrecipient with noncompliance issues properly submits a corrective action plan. The Department should then perform a follow-up review to verify the subrecipient has taken timely and appropriate action to address the noncompliance issues identified.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? ANNUAL REPORT Finding Number: 2022-008 State Agency Number: EDU-03 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 S425D210035 / 2021 S425U210035 / 2021 Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS The U.S. Department of Education?s (USED) Office of Elementary and Secondary Education?s website states: All grantees are required to report on Elementary and Secondary School Emergency Relief (ESSER) funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA Act), and the American Rescue Plan (ARP Act). Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Part B(9) of the Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund) between the Department and USED states, in part: ?The Secretary may require additional reporting in the future, which may include: the methodology LEAs [Local Education Agencies] will use to provide services or assistance to students and staff in both public and non-public schools, the uses of funds by the LEAs or other entities and demonstration of their compliance with Section 18003(d) of the CARES Act ... Further, the 2022 U.S. Office of Management and Budget?s Compliance Supplement states, in part: ESSER. . .grantees must submit an annual performance report (OMB No. 1810-0749?) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Per guidance received from USED, the Department was required to submit the annual performance report for the Education Stabilization Fund?s ESSER I, II, and III subprograms between May 31 ? July 1, 2022. The Department submitted the report on July 1, 2022; however, USED noted several errors in the Department?s report and allowed the Department to submit an amended report between August 22 ? September 9, 2022. The Department submitted the amended version on September 8, 2022. Both the original and amended versions of the annual performance report covered the period of October 1, 2020 through June 30, 2021 for ESSER I and the period of July 1, 2020 through June 30, 2021 for ESSER II and ARP ESSER (ESSER III). The Department worked with the Management Council of the Ohio Education Computer Network to create a data portal for each school district to report their ESSER activity. The Department then used this data to compile the annual performance report and upload it into the Data Collection Tool, the application USED established to collect the data. However, while the Department had control procedures in place, they were not sufficient to ensure the completeness and accuracy of the information included in the annual report. In addition, the Department was unable to provide documentation to support the amounts reported. As a result, the total expenditures reported for 23 of 25 school districts selected for testing were not calculated/reported correctly when compared to amounts from the Ohio Administrative Knowledge System (OAKS) Voucher Payment Report, which was the only potential source available for testing. The total expenditures for each ESSER program and the respective variances were as follows: Program # of Schools Tested / # With Errors Total Expenditures per Annual Report Total Expenditures per OAKS Variance ESSER I 8 / 8 $43,313,688 $42,615,001 $698,687 ESSER II 9 / 7 $26,292,636 $13,004,131 $13,288,505 ARP ESSER (III) 8 / 8 $5,390,777 $0 $5,390,777 Totals 25 / 23 $74,997,101 $55,119,132 $19,377,969 Without proper procedures in place to ensure the amounts included in the report are complete and accurate, there is an increased risk that amounts reported to the federal grantor agency are incorrect. Inaccurate reporting could subject the Department to fines or other sanctions imposed by the federal grantor agency. Based on discussions with management, changes to the program requirements throughout the period made it difficult for the Department and the school districts to provide accurate information. In addition, not all school districts understood what time period the annual report was to cover which led to inconsistent data being reported in the portal. We recommend the Department implement policies and procedures to ensure that all amounts reported on the annual report are complete and accurate. These procedures should include formally notifying the school districts what period the data should come from, ensuring the data pulled from the portal is complete and accurate prior to compiling it in the annual report, and reconciling the amounts included in the annual report to information provided by the school districts. We further recommend the Department develop procedures on how to handle adjustments the school districts make to the data.
EDUCATION STABILIZATION FUND ? SUBRECIPIENT MONITORING Finding Number: 2022-006 State Agency Number: EDU-01 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 Federal Agency: Department of Education Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 200.332 outlines pass-through entity responsibilities and states, in part, that all pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ? (2) 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 written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. . . . The Department's Office of Federal Programs is responsible for monitoring subrecipients of the Education Stabilization Fund (ESF), including the subprogram, Elementary and Secondary School Emergency Relief (ESSER) Fund. The Office of Federal Programs monitors subrecipient compliance with ESSER program requirements through self-surveys, desk reviews, or on-site reviews based on various risk factors. If noncompliance is identified, the Department requests and reviews the corrective action plan created by the subrecipient. The Office of Federal Programs then performs a follow-up desk review to ensure the subrecipient successfully implemented their corrective action plan. During state fiscal year (SFY) 2022, the Office of Federal Programs identified four noncompliance issues for the ESF ? ESSER program that required corrective action plans. However, for one of two (50%) noncompliance issues selected for testing, the Office of Federal Programs did not obtain a corrective action plan, nor did they perform a follow-up desk review to ensure a corrective action plan was implemented timely and properly. Failure to follow up with subrecipients on noncompliance issues identified through the monitoring process could lead to further noncompliance with federal program regulations, as well as improper use of funding. Based on discussions with management, when the Office of Federal Programs separated the ESSER compliance monitoring out of the Department?s consolidated grants monitoring system into its own individual process at the beginning of SFY 2022, this noncompliance issue which was identified and included in the previous system was missed due to oversight. The Department?s Office of Federal Programs should strengthen existing processes and procedures to ensure that all subrecipients with detected noncompliance issues are properly accounted for in the monitoring records/system. The Department should take measures to ensure each subrecipient with noncompliance issues properly submits a corrective action plan. The Department should then perform a follow-up review to verify the subrecipient has taken timely and appropriate action to address the noncompliance issues identified.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? ANNUAL REPORT Finding Number: 2022-008 State Agency Number: EDU-03 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 S425D210035 / 2021 S425U210035 / 2021 Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS The U.S. Department of Education?s (USED) Office of Elementary and Secondary Education?s website states: All grantees are required to report on Elementary and Secondary School Emergency Relief (ESSER) funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA Act), and the American Rescue Plan (ARP Act). Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Part B(9) of the Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund) between the Department and USED states, in part: ?The Secretary may require additional reporting in the future, which may include: the methodology LEAs [Local Education Agencies] will use to provide services or assistance to students and staff in both public and non-public schools, the uses of funds by the LEAs or other entities and demonstration of their compliance with Section 18003(d) of the CARES Act ... Further, the 2022 U.S. Office of Management and Budget?s Compliance Supplement states, in part: ESSER. . .grantees must submit an annual performance report (OMB No. 1810-0749?) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Per guidance received from USED, the Department was required to submit the annual performance report for the Education Stabilization Fund?s ESSER I, II, and III subprograms between May 31 ? July 1, 2022. The Department submitted the report on July 1, 2022; however, USED noted several errors in the Department?s report and allowed the Department to submit an amended report between August 22 ? September 9, 2022. The Department submitted the amended version on September 8, 2022. Both the original and amended versions of the annual performance report covered the period of October 1, 2020 through June 30, 2021 for ESSER I and the period of July 1, 2020 through June 30, 2021 for ESSER II and ARP ESSER (ESSER III). The Department worked with the Management Council of the Ohio Education Computer Network to create a data portal for each school district to report their ESSER activity. The Department then used this data to compile the annual performance report and upload it into the Data Collection Tool, the application USED established to collect the data. However, while the Department had control procedures in place, they were not sufficient to ensure the completeness and accuracy of the information included in the annual report. In addition, the Department was unable to provide documentation to support the amounts reported. As a result, the total expenditures reported for 23 of 25 school districts selected for testing were not calculated/reported correctly when compared to amounts from the Ohio Administrative Knowledge System (OAKS) Voucher Payment Report, which was the only potential source available for testing. The total expenditures for each ESSER program and the respective variances were as follows: Program # of Schools Tested / # With Errors Total Expenditures per Annual Report Total Expenditures per OAKS Variance ESSER I 8 / 8 $43,313,688 $42,615,001 $698,687 ESSER II 9 / 7 $26,292,636 $13,004,131 $13,288,505 ARP ESSER (III) 8 / 8 $5,390,777 $0 $5,390,777 Totals 25 / 23 $74,997,101 $55,119,132 $19,377,969 Without proper procedures in place to ensure the amounts included in the report are complete and accurate, there is an increased risk that amounts reported to the federal grantor agency are incorrect. Inaccurate reporting could subject the Department to fines or other sanctions imposed by the federal grantor agency. Based on discussions with management, changes to the program requirements throughout the period made it difficult for the Department and the school districts to provide accurate information. In addition, not all school districts understood what time period the annual report was to cover which led to inconsistent data being reported in the portal. We recommend the Department implement policies and procedures to ensure that all amounts reported on the annual report are complete and accurate. These procedures should include formally notifying the school districts what period the data should come from, ensuring the data pulled from the portal is complete and accurate prior to compiling it in the annual report, and reconciling the amounts included in the annual report to information provided by the school districts. We further recommend the Department develop procedures on how to handle adjustments the school districts make to the data.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
SNAP CLUSTER AND TANF ? IEVS ALERTS Finding Number: 2022-013 State Agency Number: JFS-05 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2022 (SNAP Cluster) 222OH102S6018 / 2022 (SNAP Cluster) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Eligibility, Special Tests and Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-013 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001, and 2022-017 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.8(c), states the following regarding the Supplemental Nutrition Assistance Program (SNAP) Cluster: (1) State agency action on information items about recipient households shall include: (i) Review of the information and comparison of it to case record information; (ii) For all new or previously unverified information received, contact with the households and/or collateral contacts to resolve discrepancies as specified in ???273.2(f)(4)(iv) and 273.2 (f)(9)(iii) and (f)(9)(iv); and (iii) If discrepancies warrant reducing benefits or terminating eligibility, notices of adverse action. (2) State agencies must initiate and pursue the actions on recipient households specified in paragraph (c)(1) of this section so that the actions are completed within 45 days of receipt of the information items. Actions may be completed later than 45 days from the receipt of information if: (A) The only reason that the actions cannot be completed is the nonreceipt of verification requested from collateral contacts; and (B) The actions are completed as specified in ? 273.12 of this chapter when verification from a collateral contact is received or in conjunction with the next case action when such verification is not received, whichever is earlier. (3) When the actions specified in paragraph (c)(1) of this section substantiate an over issuance, State agencies must establish and take actions on claims as specified in ??273.18 of this chapter. (4) State agencies must use appropriate procedures to monitor the timeliness requirements in paragraph (c)(2) of this section. 45 C.F.R. ? 205.56(a)(1)(iv) states the following regarding the Temporary Assistance for Needy Families (TANF) program: For individuals who are recipients when the information is received or for whom a decision could not be made prior to authorization of benefits, the State agency shall within forty-five (45) days of its receipt, initiate a notice of case action or an entry in the case record that no case action is necessary, except that: Completion of action may be delayed beyond forty-five (45) days on no more than twenty (20) percent of the information items targeted for follow-up, if: (A) The reason that the action cannot be completed within forty-five (45) days is the nonreceipt of requested third-party verification; and (B) Action is completed promptly, when third party verification is received or at the next time eligibility is redetermined, whichever is earlier. If action is completed when eligibility is redetermined and third party verification has not been received, the State agency shall make its decision based on information provided by the recipient and any other information in its possession. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. The Ohio Benefits system is utilized for processing eligibility for the SNAP Cluster and TANF programs with total expenditures to recipients of approximately $4.5 billion and $204 million, respectively, in state fiscal year (SFY) 2022. The Ohio Benefits system, administered by the Ohio Department of Administrative Services (DAS) for various public assistance programs, includes an Income Eligibility Verification System (IEVS) which compares income, as reported by the recipients, to information maintained by outside sources. Information that does not agree is communicated in the form of an Ohio Benefits system alert, which is forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming Internal Revenue Service (IRS) alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct and monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts. Also, the JFSR 4005, IEVS Monthly Summary Report, continues to be monitored by the Department?s Fraud Control staff to better recognize those county agencies who require additional training and technical assistance; however, no evidence is documented or maintained. The Department also continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. Therefore, the Department did not have effective controls or procedures in place to review and monitor the IEVS alerts generated and processed by the Ohio Benefits system to ensure they were being completed by the counties in accordance with the requirements and timeframes established in 7 C.F.R. ? 272.8, and 45 C.F.R. ? 205.56. Furthermore, an Ohio Benefits report showed 349,020 of the 556,539 (63%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, for an average of 189 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframes increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that continue to reduce the number of alerts sent to county caseworkers. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to perform periodic and timely reviews at the Department level to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. Such procedures should also include required monitoring by each County IEVS Coordinator or other supervisory personnel (through the eligibility system), which should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to monitor the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper timeframes, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Continuing to conduct and evaluate statewide and individual IEVS training for county caseworkers to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system. These trainings should be mandatory for all county personnel involved in the alerts process. We also recommend Department management continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
TANF ? REPORTING Finding Number: 2022-016 State Agency Number: JFS-08 Assistance Listing Number and Title: 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 1901OHTANF / 2019 2001OHTANF / 2020 2101OHTANF / 2021 2201OHTANF / 2022 Federal Agency: Department of Health and Human Services Compliance Requirements: Reporting, Special Tests and Provisions Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ? 265.3 (b) states, in part: The TANF Data Report consists of four sections. Two sections contain disaggregated data elements and two sections contain aggregated data elements. (1) Disaggregated Data on Families Receiving TANF Assistance?Section one. Each State must file disaggregated information on families receiving TANF assistance. This section specifies identifying and demographic data such as the individual's Social Security Number and information such as the amount of assistance received, educational level, employment status, work participation activities, citizenship status, and earned and unearned income. The data must be provided for both adults and children. ? 45 C.F.R. ? 261.62 states, in part: (a) To ensure accuracy in the reporting of work activities by work-eligible individuals on the TANF Data Report, each State must: . . . (2) Establish and employ procedures for determining how to count and verify reported hours of work; (4) Establish and employ internal controls to ensure compliance with the procedures; and (5) Submit to the Secretary for approval the State's Work Verification Plan ? (b) A State's Work Verification Plan must include the following: . . . (1) For each countable work activity: (i) A description demonstrating how the activity meets the relevant definition at ??261.2; (ii) A description of how the State determines the number of countable hours of participation; and (iii) A description of the documentation it uses to monitor participation and ensure that the actual hours of participation are reported; (3) A description of how the State ensures that, for each work-eligible individual, it: (iii) Accurately reports the hours to the Department; (5) A description of the internal controls that the State has implemented to ensure a consistent measurement of the work participation rates, including the quality assurance processes and sampling specifications it uses to monitor adherence to the established work verification procedures by State staff, local staff, and contractors. . . . It is management?s responsibility to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with program requirements. It is imperative that management be able to provide the underlying data and related documentation required to prepare and support these reports. During the audit period, the Department disbursed approximately $203.7 million in TANF benefits. The Department must meet or exceed its minimum annual work participation rates, as documented, and submitted through the ACF-199 TANF Data Report (TDR). The Department partners with the Ohio Department of Administrative Services (DAS), in coordination with an IT vendor, who is responsible for compiling all information provided from the Ohio Benefits (OB) eligibility system and delivering the TDR to the U.S. Department of Health and Human Services ? Administration for Children and Families (ACF). The OB system has controls in place that ensure all required data elements are completed and that only pre-determined acceptable data can be entered into the data fields. The Work Participation Rate Determination batch uses the OB rules engine to determine whether work eligible individuals active on TANF programs have met their work requirements for the month being processed. Monthly, TANF data (case record information on individuals and families) is extracted from OB and compiled into a TANF Data Universe file. Quarterly, DAS extracts data to complete the TDR using a sample of the TANF Data Universe file and submits the sample data electronically to ACF. Prior to submission of the report, the Department?s TANF Federal Reporting Team reviews the sample data to ensure completeness and accuracy. This is a system analysis process, where program code is reviewed and corrections are implemented. However, for one of 20 (5%) case files selected for testing, incorrect OB logic was applied which added 8 holiday hours to each day the individual worked that month. Without the incorrectly added holiday hours, the case did not have enough hours to meet work participation requirements for the Job Search and Job Readiness Assistance (JS/JR) hours; therefore, the hours should have been reported as Other Work Activities (OWA). The TDR identified 30 hours JS/JR and 5 hours OWA but should have identified 0 hours and 16 hours, respectively. As a result, the JS/JR data line was overstated by 30 hours and the OWA line was understated by 11 hours. If the OB business rules for calculating work participation rates are not working as intended, the Department and the federal government may not be reasonably assured the information is accurate and complete. Reporting inaccurate or incomplete information could subject the Department to sanctions imposed by the federal grantor agency, limiting the amount of funding for program activities. Based on discussions with management, the OB system logic was improperly applying holiday hours to work participation activities due to errors in the coding/business rules. We recommend the Department evaluate current procedures and implement additional policies and procedures as necessary to provide reasonable assurance the data being reported in the TDR is reasonable, accurate, and agrees to supporting documentation. Additionally, we recommend the Department work collaboratively with DAS to: ? Review the data compiling and reporting processes and make any changes or adjustments as necessary. ? Update and/or implement program logic to ensure the calculations for work participation activities when compiling the TDR are in accordance with the federal regulations. ? Evaluate and make any necessary adjustments to the TDR based on this incorrect logic and resubmit to ACF as appropriate.
SNAP CLUSTER AND TANF ? ELIGIBILITY SYSTEM Finding Number: 2022-017 State Agency Number: JFS-09 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-018 MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-013 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.10(b)(1)(i), pertaining to the SNAP Cluster, states in part, that a State?s system should: Determine eligibility and calculate benefits or validate the eligibility worker?s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members? names, addresses, dates of birth, social security numbers, individual household members? earned and unearned income by source, deductions, resources and household size) ? 45 C.F.R. ? 206.10(a), pertaining to public assistance programs, including TANF, states in part: ? (8) Each decision regarding eligibility or ineligibility will be supported by facts in the applicant?s or recipient?s case record? ? (12) The State agency shall establish and maintain methods by which it shall be kept currently informed about local agencies' adherence to the State plan provisions and to the State agency's procedural requirements for determining eligibility, and it shall take corrective action when necessary. As the lead agency responsible for administering the SNAP Cluster and TANF federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is also responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of nearly $4.7 billion in public assistance payments, to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients * 10.551/10.561 ? SNAP Cluster $ 4,465,389,555 1,502,137 93.558 ? TANF $ 203,674,740 73,104 Combined Total $ 4,669,064,295 1,575,241 * We did not separately identify recipients who could be covered under both programs These programs are administered using a multi-agency approach, as follows: overall compliance and administration of the SNAP Cluster and TANF programs fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration, Internal Revenue Service (IRS), etc.). The Department also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system for processing. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct, as well as monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts: these random reviews are looked at during the Fraud Triad Reviews. Also, the Department?s Fraud Control staff monitors the JFSR 4005, IEVS Monthly Summary Report to better recognize those county agencies which require additional training and technical assistance; however, no evidence of this monitoring is documented or maintained. ? Caseworker Reliance/Training ? The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. The Department continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. Failure to correct system weaknesses and system alerts creates an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s state supervised, county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to perform periodic and timely reviews of the JFSR 4005, IEVS Monthly Summary Report to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. The Department should also continue to perform monitoring reviews which should include verification that each County IEVS Coordinator, or other supervisory personnel, is conducting random reviews of the IEVS alerts (through the eligibility system) to determine the appropriate disposition of the alert and that it was worked timely. These random reviews should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. The Department should continue to provide this training initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
CDBG AND LIHEAP ? TRANSPARENCY ACT REPORTING Finding Number: 2022-004 State Agency Number: DEV-03 Assistance Listing Number and Title: 14.228 Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii (CDBG) 93.568 Low-Income Home Energy Assistance Program (LIHEAP) Federal Award Identification Number / Year: B-21-DC-39-0001 / 2021 (CDBG) 2101OHLIEA / 2021 (LIHEAP) Federal Agencies: Department of Housing and Urban Development Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-005 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department disbursed approximately $89 million for 236 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs: Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 14.228 CDBG 83 $27,193,724 93.568 LIHEAP 153 $61,742,923 The Department?s Finance Division managed Transparency Act reporting for all applicable programs, overseen by the Grant Strategy Manager. A tracking spreadsheet is maintained with all grants required to be reported or updated on the FSRS website with the key data elements required by the Transparency Act. The information within this spreadsheet is compiled from reports generated by the OCEAN system which the Department uses to track and maintain information on subgrant activity. Information within OCEAN is compiled by the grants personnel responsible for each federal program at the Department as well as through reporting via web interface by the subgrantee. However, there is no supervisory review of the Transparency Act reports prior to submission on the FSRS website. Further, the control procedures were not operating effectively and as a result, the following errors were noted for CDBG and LIHEAP: CDBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 3 9 3 3 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $3,016,000 $470,000 $3,016,000 $470,000 $470,000 LIHEAP Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 15 10 15 10 10 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,311,919 $ 4,728,604 $6,311,919 $4,728,604 $ 4,728,604 A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act Reports could be relying on inaccurate information. Based on discussions with management, the errors were due to beginning implementation of the reporting process late in the audit period. Additionally, the Department experienced difficulty in identifying all subawards made amongst the different offices responsible for administering federal awards, as well as obtaining all subaward information required to be reported under the Transparency Act. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards subject to the Transparency Act. We also recommend the Department continue implementation of its Transparency Act reporting process, including the process by which subawards are identified. Management should consider incorporating the input of the applicable offices within the Department to improve the process for identifying subawards and the key data elements for reporting, as well as the timeliness of reporting within the FSRS system. Management should periodically review these procedures to ensure they promote compliance with federal regulations and are operating as intended.
LIHEAP ? CASH MANAGEMENT Finding Number: 2022-005 State Agency Number: DEV-04 Assistance Listing Program Number and Title: 93.568 Low-Income Home Energy Assistance Program 93.568 COVID-19 Low-Income Home Energy Assistance Program Federal Award Identification Number / Year: 1901OHLIEA / 2019 2001OHLIEA / 2020 2001OHLIE4 / 2020 2001OHE5C3 / 2020 2101OHLIEA / 2021 2101OHLIE4 / 2021 2101OHE5C6 / 2021 2101OHLWC5 / 2021 2101OHLWC5 / 2021 Federal Agency: Department of Health and Human Services Compliance Requirement: Cash Management Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-003 NONCOMPLIANCE AND MATERIAL WEAKNESS 31 C.F.R. Part 205 ? 11 states, in part: (a) A State and a Federal Program Agency must minimize the time elapsing between the transfer of funds from the United States Treasury and the State's payout of funds for Federal assistance program purposes, whether the transfer occurs before or after the payout of funds. (b) A State and a Federal Program Agency must limit the amount of funds transferred to the minimum required to meet a State's actual and immediate cash needs. . . . To define these allowable timeframes, the State of Ohio and the U.S. Department of the Treasury entered into a Cash Management Improvement Act (CMIA) Agreement which requires the Department to utilize the Modified Pre-Issuance Methodology when requesting federal funds for the Low-Income Home Energy Assistance Program (LIHEAP). Section 6.2.4 of the agreement regarding the Modified Pre-Issuance Methodology states, in part: . . . The State shall request funds such that they are deposited in a State account not more than eight business days prior to the day the State makes a disbursement. . . The amount of the request shall be the amount the State expects to disburse. . . Furthermore, an entity?s system of internal controls consists of the policies and procedures established by management to provide reasonable assurance that it complies with applicable rules and regulations and those specific operational objectives are achieved. These policies establish the authorization level for financial and operational transactions to be executed and are meant to accomplish management's goals and professional and statutory requirements. During state fiscal year 2022, the Department drew down approximately $305.6 million in federal funding for LIHEAP. The Department utilizes the CMIA Agreement, as well as internal policies and procedures as a guide for completing federal draws. The Department compiles a worksheet of all payment requests for administrative and program costs associated with providing LIHEAP assistance in order to determine the amount of federal funds to be drawn. This evaluation includes year-to-date disbursements, year-to-date revenues, and any refunds received and/or pending. However, for seven of 13 (53.8%) federal draws selected for testing, the Department's worksheet did not contain sufficient information to allow disbursements to be tied to a specific draw. As a result, it was not possible to determine if these draws were disbursed timely in accordance with the CMIA Agreement (within eight business days). Management implemented changes to the federal draw process in February 2022 to tie specific disbursements to the related federal draw. As a result, the other six draws tested were after the implementation date and contained the required payment requests documentation so they could be tested for compliance with the CMIA Agreement. Without procedures in place which allow for ensuring timely disbursement of funds in accordance with federal requirements and the CMIA Agreement, interest penalties may be incurred by the State of Ohio. This could also subject the Department to sanctions or other penalties by the federal grantor agency. Based on discussions with management, they had not previously considered developing a process that would allow them to match federal disbursements to the related federal draw prior to fiscal year 2021. We recommend the Department periodically review and update its federal draw procedures to ensure they promote compliance with applicable cash management guidance. These procedures should include an adequate review by management to ensure they are properly documented and operating as intended.
LIHEAP ? CASH MANAGEMENT Finding Number: 2022-005 State Agency Number: DEV-04 Assistance Listing Program Number and Title: 93.568 Low-Income Home Energy Assistance Program 93.568 COVID-19 Low-Income Home Energy Assistance Program Federal Award Identification Number / Year: 1901OHLIEA / 2019 2001OHLIEA / 2020 2001OHLIE4 / 2020 2001OHE5C3 / 2020 2101OHLIEA / 2021 2101OHLIE4 / 2021 2101OHE5C6 / 2021 2101OHLWC5 / 2021 2101OHLWC5 / 2021 Federal Agency: Department of Health and Human Services Compliance Requirement: Cash Management Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-003 NONCOMPLIANCE AND MATERIAL WEAKNESS 31 C.F.R. Part 205 ? 11 states, in part: (a) A State and a Federal Program Agency must minimize the time elapsing between the transfer of funds from the United States Treasury and the State's payout of funds for Federal assistance program purposes, whether the transfer occurs before or after the payout of funds. (b) A State and a Federal Program Agency must limit the amount of funds transferred to the minimum required to meet a State's actual and immediate cash needs. . . . To define these allowable timeframes, the State of Ohio and the U.S. Department of the Treasury entered into a Cash Management Improvement Act (CMIA) Agreement which requires the Department to utilize the Modified Pre-Issuance Methodology when requesting federal funds for the Low-Income Home Energy Assistance Program (LIHEAP). Section 6.2.4 of the agreement regarding the Modified Pre-Issuance Methodology states, in part: . . . The State shall request funds such that they are deposited in a State account not more than eight business days prior to the day the State makes a disbursement. . . The amount of the request shall be the amount the State expects to disburse. . . Furthermore, an entity?s system of internal controls consists of the policies and procedures established by management to provide reasonable assurance that it complies with applicable rules and regulations and those specific operational objectives are achieved. These policies establish the authorization level for financial and operational transactions to be executed and are meant to accomplish management's goals and professional and statutory requirements. During state fiscal year 2022, the Department drew down approximately $305.6 million in federal funding for LIHEAP. The Department utilizes the CMIA Agreement, as well as internal policies and procedures as a guide for completing federal draws. The Department compiles a worksheet of all payment requests for administrative and program costs associated with providing LIHEAP assistance in order to determine the amount of federal funds to be drawn. This evaluation includes year-to-date disbursements, year-to-date revenues, and any refunds received and/or pending. However, for seven of 13 (53.8%) federal draws selected for testing, the Department's worksheet did not contain sufficient information to allow disbursements to be tied to a specific draw. As a result, it was not possible to determine if these draws were disbursed timely in accordance with the CMIA Agreement (within eight business days). Management implemented changes to the federal draw process in February 2022 to tie specific disbursements to the related federal draw. As a result, the other six draws tested were after the implementation date and contained the required payment requests documentation so they could be tested for compliance with the CMIA Agreement. Without procedures in place which allow for ensuring timely disbursement of funds in accordance with federal requirements and the CMIA Agreement, interest penalties may be incurred by the State of Ohio. This could also subject the Department to sanctions or other penalties by the federal grantor agency. Based on discussions with management, they had not previously considered developing a process that would allow them to match federal disbursements to the related federal draw prior to fiscal year 2021. We recommend the Department periodically review and update its federal draw procedures to ensure they promote compliance with applicable cash management guidance. These procedures should include an adequate review by management to ensure they are properly documented and operating as intended.
WIOA CLUSTER AND FOSTER CARE ? FEDERAL REPORTING Finding Number: 2022-014 State Agency Number: JFS-06 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.568 ? Foster Care Title IV-E Federal Award Identification Number / Year: AA36339DQ0 / 2021 (WIOA Cluster) 2101OHFOST / 2021 (Foster Care) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ? 75.302 contains the Department of Health and Human Services uniform administrative requirements for grants to state and local governments relating to financial administration and standards for financial management systems. Specifically, 45 C.F.R. ? 75.302 states, in part: (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds. In addition, the state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. (b) The financial management system of each non-Federal entity must provide for the following (see also Sections 75.361, .362, .363, .364, and .365): . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 75.341 and .342? (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . . The Department of Labor implemented similar uniform administrative requirements in 29 C.F.R. ? 97.20 which states, in part: (a) A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to - (1) Permit preparation of reports required by this part and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) The financial management systems of other grantees and sub grantees must meet the following standards: (1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. (2) Accounting records. Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. . . . It is management?s responsibility to implement control policies and procedures to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with program requirements. It is imperative that management be able to provide the underlying data and related program documentation required to prepare and support these reports. The Department?s Bureau of Grants Management and Federal Reporting Services (the Bureau) is responsible for the preparation of various federal financial expenditure reports, including the quarterly Foster Care CB-496 and quarterly WIOA Cluster ETA-9130 reports. The Bureau runs reports from various computer systems, transfers this information to the applicable federal reports, and submits them for a two-level review process prior to submitting them to the federal grantor agency. However, the Bureau?s review of federal reports was not adequate and/or operating effectively. As a result, the following errors were identified in the reports tested during state fiscal year 2022: ? For one of two (50%) quarterly Foster Care CB-496 reports selected for testing (quarter ending September 30, 2021): o The Bureau overstated Line 10a - Current Quarter Claims, Title IV-E Foster Care Candidate Administrative Costs - Case Planning and Management by $2,183 and the federal share for the line by $1,091. The Bureau included an amount that was already properly reported in another line. o The Bureau overstated Line 16a - Demonstration Project Costs by $63,500 and the federal share for the line by $31,750. The Bureau improperly reported the total claim amount as the federal share amount. o The Bureau incorrectly reported a decreasing prior quarter adjustment in Line 5 ? In-Placement Administrative Costs ? Case Planning and Management instead of Line 6 ? In-Placement Administrative Costs ? Eligibility Determinations. This caused line 5 to be understated by $171 and the federal share for the line to be understated by $85. As a result, Line 6 was overstated by the same amounts. ? For one of 15 (6.7%) quarterly WIOA Cluster ETA-9130 reports selected for testing (Statewide Rapid Response for quarter ending March 31, 2022): o The Bureau reported Line 10g - Federal Share of Unliquidated Obligations as $59,668; however, supporting documentation showed the amount to be $44,755, for an overstatement of $14,913. A lack of adequate internal controls over federal reporting increases the risk that reports submitted to the federal grantor agency are inaccurate. If the underlying data for the submitted reports cannot be readily verified, the Department and the federal government may not be reasonably assured the information is accurate and complete. Reporting inaccurate or incomplete information could subject the Department to federal sanctions, limiting the amount of funding for program activities. Based on discussions with management, these errors were due to oversight. We recommend the Department evaluate current procedures and implement additional policies and procedures as necessary to provide reasonable assurance the data being reported for all federal programs is reasonable and accurate and agrees to supporting documentation. The Department should ensure all reports (and any necessary corrections to reports) are reviewed and approved by the appropriate level of management.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
VARIOUS PROGRAMS ? SUBRECIPIENT MONITORING Finding Number: 2022-020 State Agency Number: MHA-01 Assistance Listing Numbers and Titles: 93.667 ?- Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-022 NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ?75.352 states, in part: All pass-through entities must: . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section? (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity; (2) 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 (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 75.521. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing on-site reviews of the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in ? 75.425. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are in compliance with laws and regulations. In addition, sound internal control procedures require management to monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year (SFY) 2022, the Department disbursed approximately $122.8 million to subrecipients of the SSBG, Opioid STR, and MHBG programs, as follows: Assistance Listing Number & Title Disbursements to Subrecipients Number of Subrecipients 93.667 ?- SSBG $6,741,813 50* 93.788 ? Opioid STR $87,873,804 189* 93.958 ? MHBG $28,199,223 134* Combined Total: $122,814,840 ? Includes 50 Alcohol, Drug Addiction, and Mental Health (ADAMH) boards The Department?s Community Monitoring Section (CMS) deploys a risk management monitoring technique for subrecipient monitoring to analyze and evaluate vulnerabilities of federal awards provided to the ADAMH boards. At the beginning of each fiscal year, CMS sends out questionnaires to all 50 ADAMH boards soliciting feedback regarding financial reporting, organizational turnover, number of contracted agencies, and whether any other monitoring (i.e., financial audits, peer review) has been completed. The Department then compiles the Consolidated Unexpended Funds spreadsheet based on financial data obtained from the questionnaires, including any variances in financial data and unexpended federal funds. The CMS Manager then utilizes the Consolidated Unexpended Funds spreadsheet to determine how to manage the State-wide risk and instructs CMS staff how to deploy its monitoring efforts for the SFY. Annually, CMS is to conduct Single Audit report reviews to ensure subrecipients, who have received at least $750,000 in federal funding for the fiscal year, have complied with the requirements for federal awards passed through the Department and make management decisions on any audit findings/corrective action plans within six months of the audit report date. The Department utilizes a database/Audit Review Tracking Spreadsheet to track data on subrecipients, such as: desk reviews, single audit reviews, subrecipient financial information, amounts subrecipients reported on their Schedule of Expenditures of Federal Awards, financial information from the State?s accounting system, and any other information about the subrecipient that would assist in effectively managing State-wide concerns on the federal awards passed through the Department. The Department reviews the Single Audits completed and the Corrective Action Plan (CAP), if applicable, for subrecipients with findings and issues a Management Decision letter to the subrecipient within six months of the audit report date. During the risk management process, CMS evaluates the rotation cycle, questionnaire results, and Board Risk Scores and identifies the Boards for which it will conduct the Stakeholder Assistance Review (SAR) procedures. The Department has designated the SAR process as an increased monitoring technique which is only applied to specific Boards designated as higher risk where the Department will conduct a physical on-site and/or virtual visit during the SFY. The SAR process is performed on a rotation basis to obtain approximately 33% or more coverage of all boards per Department policy. During SFY 2022, the Department performed risk management reviews, on-site reviews, and single audit reviews of the ADAMH boards; however, the following issues were identified: ? The Department did not have procedures in place to monitor Opioid STR and MHBG subrecipients, other than the 50 ADAMH boards. As a result, the Department did not monitor 139 of 189 (73.5%) Opioid STR subrecipients which received $94.1 million, and 84 of 134 (62.7%) MHBG subrecipients which received $23.4 million during the audit period as required by 45 C.F.R. ?75.352 (d). ? For three of three (100%) audit reports selected for testing, the Department did not complete or provide the management decision letters to the subrecipients. As such, the Department did not issue a management decision (within six months of the report being accepted), as required by 45 C.F.R. ?75.352 (d)(3). ? The Department did not complete 16 of 17 (94.1%) planned SAR on-site/virtual visits during the audit period. Without adequate procedures in place to monitor subrecipient compliance with federal statutes, laws and regulations, there is an increased risk subrecipients may misuse federal funds for unauthorized purposes. This could lead to fines, penalties, or repayment of program funds being imposed by the federal grantor agency. Based on discussions with management, the lack of subrecipient monitoring and documentation was caused by employee turnover, new management, and oversight. We recommend the Department evaluate its current control procedures and processes over subrecipient monitoring and update them as necessary to reasonably ensure compliance with 45 C.F.R. ?75.352. These procedures should include risk management monitoring, increased and SAR desk reviews, and Single Audit reviews. Additionally, the Department should ensure an appropriate level of coverage is obtained for each federal program based on major program testing within the Single Audits. The Department should also put monitoring procedures in place over all subrecipients and not just the 50 ADAMH boards. Management should periodically monitor these procedures to ensure they are operating effectively and as intended.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-022 State Agency Number: MHA-03 Assistance Listing Numbers and Titles: 93.667 ? Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Block Grants for Community Mental Health Services (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-023 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $123.6 million for 329 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 93.667 SSBG 50 $6,690,064 93.788 Opioid STR 184 $94,056,082 93.958 MHBG 95 $22,856,777 Monthly, the Department?s Fiscal Office is to generate the Transparency Act report from the Grants Funding Management System (GFMS) and review it for completeness and accuracy, then approve it in the GFMS system. The Transparency Act report is then manually entered or uploaded into the FSRS website. However, there is no supervisory review of the report prior to submission to the FSRS website and the controls were not operating effectively during the audit period. As a result, the Department did not submit 311 of 329 (94.5%) subawards within the FSRS website for the SSBG, Opioid STR, and MHBG programs during state fiscal year 2022 as detailed below, per program: SSBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 50 50 50 50 50 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,690,064 $6,690,064 $6,690,064 $6,690,064 $6,690,064 Opioid STR Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 172 172 172 172 172 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $90,965,560 $90,965,560 $90,965,560 $90,965,560 $90,965,560 MHBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 89 89 89 89 89 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $21,818,231 $21,818,231 $21,818,231 $21,818,231 $21,818,231 By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within the FSRS website, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these errors were caused by management and employee turnover and internal system issues to comply with the Transparency Act report format. We recommend the Department collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include a supervisory review of the report information before it is submitted on the FSRS website.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
VARIOUS PROGRAMS ? SUBRECIPIENT MONITORING Finding Number: 2022-020 State Agency Number: MHA-01 Assistance Listing Numbers and Titles: 93.667 ?- Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-022 NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ?75.352 states, in part: All pass-through entities must: . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section? (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity; (2) 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 (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 75.521. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing on-site reviews of the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in ? 75.425. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are in compliance with laws and regulations. In addition, sound internal control procedures require management to monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year (SFY) 2022, the Department disbursed approximately $122.8 million to subrecipients of the SSBG, Opioid STR, and MHBG programs, as follows: Assistance Listing Number & Title Disbursements to Subrecipients Number of Subrecipients 93.667 ?- SSBG $6,741,813 50* 93.788 ? Opioid STR $87,873,804 189* 93.958 ? MHBG $28,199,223 134* Combined Total: $122,814,840 ? Includes 50 Alcohol, Drug Addiction, and Mental Health (ADAMH) boards The Department?s Community Monitoring Section (CMS) deploys a risk management monitoring technique for subrecipient monitoring to analyze and evaluate vulnerabilities of federal awards provided to the ADAMH boards. At the beginning of each fiscal year, CMS sends out questionnaires to all 50 ADAMH boards soliciting feedback regarding financial reporting, organizational turnover, number of contracted agencies, and whether any other monitoring (i.e., financial audits, peer review) has been completed. The Department then compiles the Consolidated Unexpended Funds spreadsheet based on financial data obtained from the questionnaires, including any variances in financial data and unexpended federal funds. The CMS Manager then utilizes the Consolidated Unexpended Funds spreadsheet to determine how to manage the State-wide risk and instructs CMS staff how to deploy its monitoring efforts for the SFY. Annually, CMS is to conduct Single Audit report reviews to ensure subrecipients, who have received at least $750,000 in federal funding for the fiscal year, have complied with the requirements for federal awards passed through the Department and make management decisions on any audit findings/corrective action plans within six months of the audit report date. The Department utilizes a database/Audit Review Tracking Spreadsheet to track data on subrecipients, such as: desk reviews, single audit reviews, subrecipient financial information, amounts subrecipients reported on their Schedule of Expenditures of Federal Awards, financial information from the State?s accounting system, and any other information about the subrecipient that would assist in effectively managing State-wide concerns on the federal awards passed through the Department. The Department reviews the Single Audits completed and the Corrective Action Plan (CAP), if applicable, for subrecipients with findings and issues a Management Decision letter to the subrecipient within six months of the audit report date. During the risk management process, CMS evaluates the rotation cycle, questionnaire results, and Board Risk Scores and identifies the Boards for which it will conduct the Stakeholder Assistance Review (SAR) procedures. The Department has designated the SAR process as an increased monitoring technique which is only applied to specific Boards designated as higher risk where the Department will conduct a physical on-site and/or virtual visit during the SFY. The SAR process is performed on a rotation basis to obtain approximately 33% or more coverage of all boards per Department policy. During SFY 2022, the Department performed risk management reviews, on-site reviews, and single audit reviews of the ADAMH boards; however, the following issues were identified: ? The Department did not have procedures in place to monitor Opioid STR and MHBG subrecipients, other than the 50 ADAMH boards. As a result, the Department did not monitor 139 of 189 (73.5%) Opioid STR subrecipients which received $94.1 million, and 84 of 134 (62.7%) MHBG subrecipients which received $23.4 million during the audit period as required by 45 C.F.R. ?75.352 (d). ? For three of three (100%) audit reports selected for testing, the Department did not complete or provide the management decision letters to the subrecipients. As such, the Department did not issue a management decision (within six months of the report being accepted), as required by 45 C.F.R. ?75.352 (d)(3). ? The Department did not complete 16 of 17 (94.1%) planned SAR on-site/virtual visits during the audit period. Without adequate procedures in place to monitor subrecipient compliance with federal statutes, laws and regulations, there is an increased risk subrecipients may misuse federal funds for unauthorized purposes. This could lead to fines, penalties, or repayment of program funds being imposed by the federal grantor agency. Based on discussions with management, the lack of subrecipient monitoring and documentation was caused by employee turnover, new management, and oversight. We recommend the Department evaluate its current control procedures and processes over subrecipient monitoring and update them as necessary to reasonably ensure compliance with 45 C.F.R. ?75.352. These procedures should include risk management monitoring, increased and SAR desk reviews, and Single Audit reviews. Additionally, the Department should ensure an appropriate level of coverage is obtained for each federal program based on major program testing within the Single Audits. The Department should also put monitoring procedures in place over all subrecipients and not just the 50 ADAMH boards. Management should periodically monitor these procedures to ensure they are operating effectively and as intended.
OPIOID STR & MHBG ? CASH MANAGEMENT Finding Number: 2022-021 State Agency Number: MHA-02 Assistance Listing Number and Title: 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) Federal Award Identification Number / Year: H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Cash Management Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS U.S. Treasury regulations, 31 C.F.R. Part 205, which implemented the Cash Management Improvement Act of 1990 (CMIA), require state recipients enter into agreements that prescribe specific methods of drawing down Federal funds (funding techniques) for selected large programs. The Opioid STR and MHBG programs were not included in the state fiscal year 2022 CMIA Agreement; therefore, 31 C.F.R. ? 205.33(a) sets guidelines which states, in part: A State must minimize the time between the drawdown of Federal funds from the Federal government and their disbursement for Federal program purposes. A Federal Program Agency must limit a funds transfer to a State to the minimum amounts needed by the State and must time the disbursement to be in accord with the actual, immediate cash requirements of the State in carrying out a Federal assistance program or project. The timing and amount of funds transfers must be as close as is administratively feasible to a State's actual cash outlay for direct program costs and the proportionate share of any allowable indirect costs? The Department draws federal funds for the Opioid STR and MHBG programs similarly to those which follow the Modified Pre-Issuance funding technique and considers eight business days a reasonable amount of time to disburse the drawn federal funds for program expenses. It is management?s responsibility to implement control policies and procedures to reasonably ensure draws of federal funds are for immediate cash needs, processed accurately, and disbursed timely in accordance with applicable laws and regulations. During state fiscal year 2022, the Department drew down approximately $112.8 million and $32.9 million in federal funding for the Opioid STR and MHBG programs, respectively. Once voucher payments are approved in the Ohio Administrative Knowledge System (OAKS) and the Payment Management System (PMS), the Department draws the Opioid STR and MHBG funds electronically from PMS to cover the amount of the vouchers, as the account is to maintain a zero cash balance. Before drawing down funds, the Senior Financial Analyst prepares a Cash Request noting the amount to be drawn and OAKS coding. The Cash Request is then forwarded to a different Senior Financial Analyst who draws the funds down in PMS and sends the support documentation back to the original analyst for creation of the revenue receipt in OAKS. The revenue receipt is then submitted to the Community Funding Operations Manager and Ohio Treasurer of State?s Office for approval. Once approved, the Department makes a payment in the form of an electronic funds transfer or check. However, the Department's controls did not prevent noncompliance with the cash management timeliness requirements as follows: ? Of 17 Opioid STR disbursements tested from 17 draws, the Department did not disburse two payments (11.8%) within eight business days of the receipt of federal funds, as required by 31 C.F.R. ? 205.33(a). The Department disbursed the funds three days after the required disbursement date. ? Of three MHBG disbursements tested from three draws, the Department did not disburse one payment (33.3%) within eight business days of receipt of federal funds, as required by 31 C.F.R. ? 205.33(a). The Department disbursed the funds three days after the required disbursement date. Not having effective controls over the timely disbursement of federal funds could lead to the Department not limiting draws to immediate cash needs and not expending funds timely. This could result in noncompliance with 31 C.F.R. ? 205.33(a) and could subject the Department to sanctions, other penalties, or a repayment of part of the grant award amounts. In addition, noncompliance could subject the Department to paying interest charges on these draws. Based on discussions with management and review of supporting documents, the errors were due to voucher processing and approval delays. We recommend the Department evaluate its existing cash management control procedures and update them as necessary to reasonably ensure all federal draw requests are disbursed timely and are drawn only for immediate cash needs, based on the funding technique established in accordance with 31 C.F.R. ? 205.33(a). We also recommend the Department establish procedures to periodically monitor its compliance with the cash management requirements and initiate necessary actions to resolve any noncompliance that results.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-022 State Agency Number: MHA-03 Assistance Listing Numbers and Titles: 93.667 ? Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Block Grants for Community Mental Health Services (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-023 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $123.6 million for 329 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 93.667 SSBG 50 $6,690,064 93.788 Opioid STR 184 $94,056,082 93.958 MHBG 95 $22,856,777 Monthly, the Department?s Fiscal Office is to generate the Transparency Act report from the Grants Funding Management System (GFMS) and review it for completeness and accuracy, then approve it in the GFMS system. The Transparency Act report is then manually entered or uploaded into the FSRS website. However, there is no supervisory review of the report prior to submission to the FSRS website and the controls were not operating effectively during the audit period. As a result, the Department did not submit 311 of 329 (94.5%) subawards within the FSRS website for the SSBG, Opioid STR, and MHBG programs during state fiscal year 2022 as detailed below, per program: SSBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 50 50 50 50 50 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,690,064 $6,690,064 $6,690,064 $6,690,064 $6,690,064 Opioid STR Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 172 172 172 172 172 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $90,965,560 $90,965,560 $90,965,560 $90,965,560 $90,965,560 MHBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 89 89 89 89 89 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $21,818,231 $21,818,231 $21,818,231 $21,818,231 $21,818,231 By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within the FSRS website, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these errors were caused by management and employee turnover and internal system issues to comply with the Transparency Act report format. We recommend the Department collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include a supervisory review of the report information before it is submitted on the FSRS website.
VARIOUS PROGRAMS ? SUBRECIPIENT MONITORING Finding Number: 2022-020 State Agency Number: MHA-01 Assistance Listing Numbers and Titles: 93.667 ?- Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-022 NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ?75.352 states, in part: All pass-through entities must: . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section? (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity; (2) 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 (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 75.521. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing on-site reviews of the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in ? 75.425. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are in compliance with laws and regulations. In addition, sound internal control procedures require management to monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year (SFY) 2022, the Department disbursed approximately $122.8 million to subrecipients of the SSBG, Opioid STR, and MHBG programs, as follows: Assistance Listing Number & Title Disbursements to Subrecipients Number of Subrecipients 93.667 ?- SSBG $6,741,813 50* 93.788 ? Opioid STR $87,873,804 189* 93.958 ? MHBG $28,199,223 134* Combined Total: $122,814,840 ? Includes 50 Alcohol, Drug Addiction, and Mental Health (ADAMH) boards The Department?s Community Monitoring Section (CMS) deploys a risk management monitoring technique for subrecipient monitoring to analyze and evaluate vulnerabilities of federal awards provided to the ADAMH boards. At the beginning of each fiscal year, CMS sends out questionnaires to all 50 ADAMH boards soliciting feedback regarding financial reporting, organizational turnover, number of contracted agencies, and whether any other monitoring (i.e., financial audits, peer review) has been completed. The Department then compiles the Consolidated Unexpended Funds spreadsheet based on financial data obtained from the questionnaires, including any variances in financial data and unexpended federal funds. The CMS Manager then utilizes the Consolidated Unexpended Funds spreadsheet to determine how to manage the State-wide risk and instructs CMS staff how to deploy its monitoring efforts for the SFY. Annually, CMS is to conduct Single Audit report reviews to ensure subrecipients, who have received at least $750,000 in federal funding for the fiscal year, have complied with the requirements for federal awards passed through the Department and make management decisions on any audit findings/corrective action plans within six months of the audit report date. The Department utilizes a database/Audit Review Tracking Spreadsheet to track data on subrecipients, such as: desk reviews, single audit reviews, subrecipient financial information, amounts subrecipients reported on their Schedule of Expenditures of Federal Awards, financial information from the State?s accounting system, and any other information about the subrecipient that would assist in effectively managing State-wide concerns on the federal awards passed through the Department. The Department reviews the Single Audits completed and the Corrective Action Plan (CAP), if applicable, for subrecipients with findings and issues a Management Decision letter to the subrecipient within six months of the audit report date. During the risk management process, CMS evaluates the rotation cycle, questionnaire results, and Board Risk Scores and identifies the Boards for which it will conduct the Stakeholder Assistance Review (SAR) procedures. The Department has designated the SAR process as an increased monitoring technique which is only applied to specific Boards designated as higher risk where the Department will conduct a physical on-site and/or virtual visit during the SFY. The SAR process is performed on a rotation basis to obtain approximately 33% or more coverage of all boards per Department policy. During SFY 2022, the Department performed risk management reviews, on-site reviews, and single audit reviews of the ADAMH boards; however, the following issues were identified: ? The Department did not have procedures in place to monitor Opioid STR and MHBG subrecipients, other than the 50 ADAMH boards. As a result, the Department did not monitor 139 of 189 (73.5%) Opioid STR subrecipients which received $94.1 million, and 84 of 134 (62.7%) MHBG subrecipients which received $23.4 million during the audit period as required by 45 C.F.R. ?75.352 (d). ? For three of three (100%) audit reports selected for testing, the Department did not complete or provide the management decision letters to the subrecipients. As such, the Department did not issue a management decision (within six months of the report being accepted), as required by 45 C.F.R. ?75.352 (d)(3). ? The Department did not complete 16 of 17 (94.1%) planned SAR on-site/virtual visits during the audit period. Without adequate procedures in place to monitor subrecipient compliance with federal statutes, laws and regulations, there is an increased risk subrecipients may misuse federal funds for unauthorized purposes. This could lead to fines, penalties, or repayment of program funds being imposed by the federal grantor agency. Based on discussions with management, the lack of subrecipient monitoring and documentation was caused by employee turnover, new management, and oversight. We recommend the Department evaluate its current control procedures and processes over subrecipient monitoring and update them as necessary to reasonably ensure compliance with 45 C.F.R. ?75.352. These procedures should include risk management monitoring, increased and SAR desk reviews, and Single Audit reviews. Additionally, the Department should ensure an appropriate level of coverage is obtained for each federal program based on major program testing within the Single Audits. The Department should also put monitoring procedures in place over all subrecipients and not just the 50 ADAMH boards. Management should periodically monitor these procedures to ensure they are operating effectively and as intended.
OPIOID STR & MHBG ? CASH MANAGEMENT Finding Number: 2022-021 State Agency Number: MHA-02 Assistance Listing Number and Title: 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) Federal Award Identification Number / Year: H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Cash Management Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS U.S. Treasury regulations, 31 C.F.R. Part 205, which implemented the Cash Management Improvement Act of 1990 (CMIA), require state recipients enter into agreements that prescribe specific methods of drawing down Federal funds (funding techniques) for selected large programs. The Opioid STR and MHBG programs were not included in the state fiscal year 2022 CMIA Agreement; therefore, 31 C.F.R. ? 205.33(a) sets guidelines which states, in part: A State must minimize the time between the drawdown of Federal funds from the Federal government and their disbursement for Federal program purposes. A Federal Program Agency must limit a funds transfer to a State to the minimum amounts needed by the State and must time the disbursement to be in accord with the actual, immediate cash requirements of the State in carrying out a Federal assistance program or project. The timing and amount of funds transfers must be as close as is administratively feasible to a State's actual cash outlay for direct program costs and the proportionate share of any allowable indirect costs? The Department draws federal funds for the Opioid STR and MHBG programs similarly to those which follow the Modified Pre-Issuance funding technique and considers eight business days a reasonable amount of time to disburse the drawn federal funds for program expenses. It is management?s responsibility to implement control policies and procedures to reasonably ensure draws of federal funds are for immediate cash needs, processed accurately, and disbursed timely in accordance with applicable laws and regulations. During state fiscal year 2022, the Department drew down approximately $112.8 million and $32.9 million in federal funding for the Opioid STR and MHBG programs, respectively. Once voucher payments are approved in the Ohio Administrative Knowledge System (OAKS) and the Payment Management System (PMS), the Department draws the Opioid STR and MHBG funds electronically from PMS to cover the amount of the vouchers, as the account is to maintain a zero cash balance. Before drawing down funds, the Senior Financial Analyst prepares a Cash Request noting the amount to be drawn and OAKS coding. The Cash Request is then forwarded to a different Senior Financial Analyst who draws the funds down in PMS and sends the support documentation back to the original analyst for creation of the revenue receipt in OAKS. The revenue receipt is then submitted to the Community Funding Operations Manager and Ohio Treasurer of State?s Office for approval. Once approved, the Department makes a payment in the form of an electronic funds transfer or check. However, the Department's controls did not prevent noncompliance with the cash management timeliness requirements as follows: ? Of 17 Opioid STR disbursements tested from 17 draws, the Department did not disburse two payments (11.8%) within eight business days of the receipt of federal funds, as required by 31 C.F.R. ? 205.33(a). The Department disbursed the funds three days after the required disbursement date. ? Of three MHBG disbursements tested from three draws, the Department did not disburse one payment (33.3%) within eight business days of receipt of federal funds, as required by 31 C.F.R. ? 205.33(a). The Department disbursed the funds three days after the required disbursement date. Not having effective controls over the timely disbursement of federal funds could lead to the Department not limiting draws to immediate cash needs and not expending funds timely. This could result in noncompliance with 31 C.F.R. ? 205.33(a) and could subject the Department to sanctions, other penalties, or a repayment of part of the grant award amounts. In addition, noncompliance could subject the Department to paying interest charges on these draws. Based on discussions with management and review of supporting documents, the errors were due to voucher processing and approval delays. We recommend the Department evaluate its existing cash management control procedures and update them as necessary to reasonably ensure all federal draw requests are disbursed timely and are drawn only for immediate cash needs, based on the funding technique established in accordance with 31 C.F.R. ? 205.33(a). We also recommend the Department establish procedures to periodically monitor its compliance with the cash management requirements and initiate necessary actions to resolve any noncompliance that results.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-022 State Agency Number: MHA-03 Assistance Listing Numbers and Titles: 93.667 ? Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Block Grants for Community Mental Health Services (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-023 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $123.6 million for 329 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 93.667 SSBG 50 $6,690,064 93.788 Opioid STR 184 $94,056,082 93.958 MHBG 95 $22,856,777 Monthly, the Department?s Fiscal Office is to generate the Transparency Act report from the Grants Funding Management System (GFMS) and review it for completeness and accuracy, then approve it in the GFMS system. The Transparency Act report is then manually entered or uploaded into the FSRS website. However, there is no supervisory review of the report prior to submission to the FSRS website and the controls were not operating effectively during the audit period. As a result, the Department did not submit 311 of 329 (94.5%) subawards within the FSRS website for the SSBG, Opioid STR, and MHBG programs during state fiscal year 2022 as detailed below, per program: SSBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 50 50 50 50 50 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,690,064 $6,690,064 $6,690,064 $6,690,064 $6,690,064 Opioid STR Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 172 172 172 172 172 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $90,965,560 $90,965,560 $90,965,560 $90,965,560 $90,965,560 MHBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 89 89 89 89 89 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $21,818,231 $21,818,231 $21,818,231 $21,818,231 $21,818,231 By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within the FSRS website, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these errors were caused by management and employee turnover and internal system issues to comply with the Transparency Act report format. We recommend the Department collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include a supervisory review of the report information before it is submitted on the FSRS website.
VARIOUS PROGRAMS ? SUBRECIPIENT MONITORING Finding Number: 2022-020 State Agency Number: MHA-01 Assistance Listing Numbers and Titles: 93.667 ?- Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-022 NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ?75.352 states, in part: All pass-through entities must: . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section? (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity; (2) 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 (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 75.521. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing on-site reviews of the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in ? 75.425. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are in compliance with laws and regulations. In addition, sound internal control procedures require management to monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year (SFY) 2022, the Department disbursed approximately $122.8 million to subrecipients of the SSBG, Opioid STR, and MHBG programs, as follows: Assistance Listing Number & Title Disbursements to Subrecipients Number of Subrecipients 93.667 ?- SSBG $6,741,813 50* 93.788 ? Opioid STR $87,873,804 189* 93.958 ? MHBG $28,199,223 134* Combined Total: $122,814,840 ? Includes 50 Alcohol, Drug Addiction, and Mental Health (ADAMH) boards The Department?s Community Monitoring Section (CMS) deploys a risk management monitoring technique for subrecipient monitoring to analyze and evaluate vulnerabilities of federal awards provided to the ADAMH boards. At the beginning of each fiscal year, CMS sends out questionnaires to all 50 ADAMH boards soliciting feedback regarding financial reporting, organizational turnover, number of contracted agencies, and whether any other monitoring (i.e., financial audits, peer review) has been completed. The Department then compiles the Consolidated Unexpended Funds spreadsheet based on financial data obtained from the questionnaires, including any variances in financial data and unexpended federal funds. The CMS Manager then utilizes the Consolidated Unexpended Funds spreadsheet to determine how to manage the State-wide risk and instructs CMS staff how to deploy its monitoring efforts for the SFY. Annually, CMS is to conduct Single Audit report reviews to ensure subrecipients, who have received at least $750,000 in federal funding for the fiscal year, have complied with the requirements for federal awards passed through the Department and make management decisions on any audit findings/corrective action plans within six months of the audit report date. The Department utilizes a database/Audit Review Tracking Spreadsheet to track data on subrecipients, such as: desk reviews, single audit reviews, subrecipient financial information, amounts subrecipients reported on their Schedule of Expenditures of Federal Awards, financial information from the State?s accounting system, and any other information about the subrecipient that would assist in effectively managing State-wide concerns on the federal awards passed through the Department. The Department reviews the Single Audits completed and the Corrective Action Plan (CAP), if applicable, for subrecipients with findings and issues a Management Decision letter to the subrecipient within six months of the audit report date. During the risk management process, CMS evaluates the rotation cycle, questionnaire results, and Board Risk Scores and identifies the Boards for which it will conduct the Stakeholder Assistance Review (SAR) procedures. The Department has designated the SAR process as an increased monitoring technique which is only applied to specific Boards designated as higher risk where the Department will conduct a physical on-site and/or virtual visit during the SFY. The SAR process is performed on a rotation basis to obtain approximately 33% or more coverage of all boards per Department policy. During SFY 2022, the Department performed risk management reviews, on-site reviews, and single audit reviews of the ADAMH boards; however, the following issues were identified: ? The Department did not have procedures in place to monitor Opioid STR and MHBG subrecipients, other than the 50 ADAMH boards. As a result, the Department did not monitor 139 of 189 (73.5%) Opioid STR subrecipients which received $94.1 million, and 84 of 134 (62.7%) MHBG subrecipients which received $23.4 million during the audit period as required by 45 C.F.R. ?75.352 (d). ? For three of three (100%) audit reports selected for testing, the Department did not complete or provide the management decision letters to the subrecipients. As such, the Department did not issue a management decision (within six months of the report being accepted), as required by 45 C.F.R. ?75.352 (d)(3). ? The Department did not complete 16 of 17 (94.1%) planned SAR on-site/virtual visits during the audit period. Without adequate procedures in place to monitor subrecipient compliance with federal statutes, laws and regulations, there is an increased risk subrecipients may misuse federal funds for unauthorized purposes. This could lead to fines, penalties, or repayment of program funds being imposed by the federal grantor agency. Based on discussions with management, the lack of subrecipient monitoring and documentation was caused by employee turnover, new management, and oversight. We recommend the Department evaluate its current control procedures and processes over subrecipient monitoring and update them as necessary to reasonably ensure compliance with 45 C.F.R. ?75.352. These procedures should include risk management monitoring, increased and SAR desk reviews, and Single Audit reviews. Additionally, the Department should ensure an appropriate level of coverage is obtained for each federal program based on major program testing within the Single Audits. The Department should also put monitoring procedures in place over all subrecipients and not just the 50 ADAMH boards. Management should periodically monitor these procedures to ensure they are operating effectively and as intended.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-022 State Agency Number: MHA-03 Assistance Listing Numbers and Titles: 93.667 ? Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Block Grants for Community Mental Health Services (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-023 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $123.6 million for 329 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 93.667 SSBG 50 $6,690,064 93.788 Opioid STR 184 $94,056,082 93.958 MHBG 95 $22,856,777 Monthly, the Department?s Fiscal Office is to generate the Transparency Act report from the Grants Funding Management System (GFMS) and review it for completeness and accuracy, then approve it in the GFMS system. The Transparency Act report is then manually entered or uploaded into the FSRS website. However, there is no supervisory review of the report prior to submission to the FSRS website and the controls were not operating effectively during the audit period. As a result, the Department did not submit 311 of 329 (94.5%) subawards within the FSRS website for the SSBG, Opioid STR, and MHBG programs during state fiscal year 2022 as detailed below, per program: SSBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 50 50 50 50 50 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,690,064 $6,690,064 $6,690,064 $6,690,064 $6,690,064 Opioid STR Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 172 172 172 172 172 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $90,965,560 $90,965,560 $90,965,560 $90,965,560 $90,965,560 MHBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 89 89 89 89 89 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $21,818,231 $21,818,231 $21,818,231 $21,818,231 $21,818,231 By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within the FSRS website, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these errors were caused by management and employee turnover and internal system issues to comply with the Transparency Act report format. We recommend the Department collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include a supervisory review of the report information before it is submitted on the FSRS website.
DISASTER GRANTS ? SUBRECIPIENT MONITORING Finding Number: 2022-023 State Agency Number: DPS-01 Assistance Listing Number and Title: 97.036 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) 97.036 COVID-19 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number / Year: 4360-DR-OH-PA / 2018 4424-DR-OH-PA / 2019 4447-DR-OH-PA / 2019 4507-DR-OH-PA / 2020 Federal Agency: Department of Homeland Security Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-024 NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 3002.10 (Adoption of 2 C.F.R. Part 200) gives regulatory effect to the Department of Homeland Security for 2 C.F.R. ? 200.332 which establishes requirements over subawards for pass-through entities and states, in part, that all pass-through entities must: . . . (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are complying with laws and regulations. It is imperative that management monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year 2022, the Department disbursed approximately $141 million in subawards to 179 subrecipients for the Disaster Grants ? Public Assistance (PA) program. After a Presidentially declared disaster or emergency occurs, a State-Local Grant Agreement is signed which outlines applicable laws and regulations the Department and subrecipient must follow in order to receive and maintain funding from the PA Program, including audit requirements if the subrecipient expends more than $750,000 in a year. The Department?s Disaster Recovery Branch (DRB) requires the subrecipient submit a certification for each year PA funds are expended, certifying if a Single Audit is required based on their total federal expenditures. The Emergency Management Grants (EMGrants) system generates these certifications based on when federal funds for a specific PA grant was paid to the subrecipient: the certifications are sent to the subrecipients at the beginning of the calendar year. Once the certification is obtained, the Department performs a desk review utilizing an Audit Review Sheet to determine if a Single Audit should have been required. If a Single Audit was required, the DRB obtains the audit report, identifies any findings related to the PA program, issues a management decision on any findings, and verifies the PA program amounts reported in the Schedule of Expenditures of Federal Awards. However, the Department did not send out certifications to the subrecipients during the audit period, or perform alternative procedures, to ensure the subrecipients obtained a Single Audit report when necessary, as required by 2 C.F.R. ? 200.332 (f). Not adequately monitoring subrecipients to ensure the required audit was performed, increases the risk that subrecipients may not be properly utilizing federal funds or adhering to program requirements which can potentially jeopardize federal funding. This could cause federal funding to be reduced, taken away, or sanctions imposed by the federal grantor agency. Based upon discussion with management, certifications were not sent because they were waiting for an enhancement to the EMGrants system which would improve Single Audit functionality, including the certification process. We recommend the Department evaluate and strengthen existing procedures regarding subrecipient monitoring. The Department should have alternative procedures to verify whether subrecipient audits were performed as required when system functionality is not available, which could include tracking funding sent to the subrecipients and/or reaching out to the subrecipients via other means. Procedures should be adequately documented to provide management reasonable assurance they have been performed. Management should periodically monitor these procedures to ensure they are operating as intended.
DISASTER GRANTS ?TRANSPARENCY ACT REPORTING Finding Number: 2022-024 State Agency Number: DPS-02 Assistance Listing Number and Title: 97.036 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) 97.036 COVID-19 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number / Year: 4360-DR-OH-PA / 2018 4424-DR-OH-PA / 2019 4447-DR-OH-PA / 2019 4507-DR-OH-PA / 2020 Federal Agency: Department of Homeland Security Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-025 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $139 million for 178 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act for the Disaster Grants ? Public Assistance (PA) program. As PA projects are approved by the Federal Emergency Management Agency (FEMA), the key data elements for the report are compiled from subrecipient State-Local Agreements and Project Worksheets (PW), which are maintained in the Department?s Emergency Management Grants (EMGrants) system. The Disaster Services Administrator generates a Transparency Act upload template from the EMGrants system and provides the report for upload to the Budget Analyst Supervisor for review and submission into the FSRS website. However, the Department's internal controls were not operating effectively. As a result, the following errors were noted: Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 18 0 5 1 18 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $10,435,840 $0 $721,980 $107,236 $10,435,840 A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussion with management, these errors were due to staffing issues and an increased workload due to the COVID-19 disaster/emergency declaration, as well as the previous three federal disaster/emergency declarations. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted.
DISASTER GRANTS ? SUBRECIPIENT MONITORING Finding Number: 2022-023 State Agency Number: DPS-01 Assistance Listing Number and Title: 97.036 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) 97.036 COVID-19 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number / Year: 4360-DR-OH-PA / 2018 4424-DR-OH-PA / 2019 4447-DR-OH-PA / 2019 4507-DR-OH-PA / 2020 Federal Agency: Department of Homeland Security Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-024 NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 3002.10 (Adoption of 2 C.F.R. Part 200) gives regulatory effect to the Department of Homeland Security for 2 C.F.R. ? 200.332 which establishes requirements over subawards for pass-through entities and states, in part, that all pass-through entities must: . . . (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are complying with laws and regulations. It is imperative that management monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year 2022, the Department disbursed approximately $141 million in subawards to 179 subrecipients for the Disaster Grants ? Public Assistance (PA) program. After a Presidentially declared disaster or emergency occurs, a State-Local Grant Agreement is signed which outlines applicable laws and regulations the Department and subrecipient must follow in order to receive and maintain funding from the PA Program, including audit requirements if the subrecipient expends more than $750,000 in a year. The Department?s Disaster Recovery Branch (DRB) requires the subrecipient submit a certification for each year PA funds are expended, certifying if a Single Audit is required based on their total federal expenditures. The Emergency Management Grants (EMGrants) system generates these certifications based on when federal funds for a specific PA grant was paid to the subrecipient: the certifications are sent to the subrecipients at the beginning of the calendar year. Once the certification is obtained, the Department performs a desk review utilizing an Audit Review Sheet to determine if a Single Audit should have been required. If a Single Audit was required, the DRB obtains the audit report, identifies any findings related to the PA program, issues a management decision on any findings, and verifies the PA program amounts reported in the Schedule of Expenditures of Federal Awards. However, the Department did not send out certifications to the subrecipients during the audit period, or perform alternative procedures, to ensure the subrecipients obtained a Single Audit report when necessary, as required by 2 C.F.R. ? 200.332 (f). Not adequately monitoring subrecipients to ensure the required audit was performed, increases the risk that subrecipients may not be properly utilizing federal funds or adhering to program requirements which can potentially jeopardize federal funding. This could cause federal funding to be reduced, taken away, or sanctions imposed by the federal grantor agency. Based upon discussion with management, certifications were not sent because they were waiting for an enhancement to the EMGrants system which would improve Single Audit functionality, including the certification process. We recommend the Department evaluate and strengthen existing procedures regarding subrecipient monitoring. The Department should have alternative procedures to verify whether subrecipient audits were performed as required when system functionality is not available, which could include tracking funding sent to the subrecipients and/or reaching out to the subrecipients via other means. Procedures should be adequately documented to provide management reasonable assurance they have been performed. Management should periodically monitor these procedures to ensure they are operating as intended.
DISASTER GRANTS ?TRANSPARENCY ACT REPORTING Finding Number: 2022-024 State Agency Number: DPS-02 Assistance Listing Number and Title: 97.036 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) 97.036 COVID-19 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number / Year: 4360-DR-OH-PA / 2018 4424-DR-OH-PA / 2019 4447-DR-OH-PA / 2019 4507-DR-OH-PA / 2020 Federal Agency: Department of Homeland Security Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-025 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $139 million for 178 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act for the Disaster Grants ? Public Assistance (PA) program. As PA projects are approved by the Federal Emergency Management Agency (FEMA), the key data elements for the report are compiled from subrecipient State-Local Agreements and Project Worksheets (PW), which are maintained in the Department?s Emergency Management Grants (EMGrants) system. The Disaster Services Administrator generates a Transparency Act upload template from the EMGrants system and provides the report for upload to the Budget Analyst Supervisor for review and submission into the FSRS website. However, the Department's internal controls were not operating effectively. As a result, the following errors were noted: Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 18 0 5 1 18 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $10,435,840 $0 $721,980 $107,236 $10,435,840 A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussion with management, these errors were due to staffing issues and an increased workload due to the COVID-19 disaster/emergency declaration, as well as the previous three federal disaster/emergency declarations. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
SNAP CLUSTER ? INELIGIBLE RECIPIENT Finding Number: 2022-011 State Agency Number: JFS-03 Assistance Listing Number and Title: 10.551/10.561 ? SNAP Cluster Federal Award Identification Number / Year: 202OH102S2514 / 2020 202OH102S6018 / 2020 212OH102S2514 / 2021 212OH102S6018 / 2021 222OH102S2514 / 2022 222OH102S6018 / 2022 Federal Agency: Department of Agriculture Compliance Requirement: Eligibility Repeat Finding from Prior Audit? No QUESTIONED COSTS 7 C.F.R. ?272.10(b)(1)(i), pertaining to the Supplemental Nutrition Assistance Program (SNAP) Cluster, states in part, that a State?s system should: Determine eligibility and calculate benefits or validate the eligibility worker?s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members? names, addresses, dates of birth, social security numbers, individual household members? earned and unearned income by source, deductions, resources and household size) ? Ohio Admin. Code (OAC) 5101:4-4-31(H) states: . . . When should actual income be used instead of converted income? When a full month's income is anticipated and income is received on a weekly or biweekly basis, the county agency shall determine monthly income by multiplying weekly amounts by 4.3 and biweekly amounts by 2.15. In one-month certifications, income on less than a monthly basis may be computed by using the actual income that is to be received. When income that was received on a weekly or biweekly basis has stopped, actual income (not converted) is used. As the lead agency responsible for administering the SNAP Cluster federal program for the State of Ohio, the Department is responsible for overall program compliance which includes ensuring only eligible individuals receive assistance and documentation maintained to support eligibility determinations is accurate, complete, and properly recorded in the Ohio Benefits (OB) system. It is the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the SNAP Cluster rules and regulations and only eligible recipients receive benefits. It is also the Department's responsibility to have appropriate oversight and monitoring procedures in place to ensure these controls, systems, processes and procedures are operating as intended and to comply with program guidelines and requirements. During state fiscal year 2022, the Department disbursed approximately $4.5 billion in federal assistance to eligible recipients from the SNAP Cluster program based on information provided by the 88 County Departments of Job and Family Services (CDJFS). The CDJFS caseworkers are responsible for obtaining the required eligibility information and entering it into OB in order for the application to be processed and the eligibility determination to be made. However, for one of 60 (1.67%) SNAP Cluster case files selected for testing at 10 CDJFS, totaling $592, the CDJFS (Montgomery) did not properly enter the income frequency into OB based on supporting documentation provided by the recipient. The caseworker entered the income frequency as `one-time?; however, it should have been `bi-weekly?. Therefore, the income was not converted correctly in accordance with OAC 5101:4-4-31 which resulted in an understatement of income and overcalculation of benefits. As such, we will question all benefits issued to the recipient totaling $3,629 (projected to an amount greater than $25,000). By not properly entering correct recipient income information into OB, inaccurate eligibility determinations could be made or recipient benefit issuance amounts could be miscalculated. If the Department does not consistently review the required documentation on file and in OB, the Department may not be able to fully support or ensure payments were made only to, or on behalf of, eligible recipients, and that the Department complied with all federal rules and regulations. This could result in additional questioned costs, a reduction in federal funding, or sanctions imposed by the federal grantor agency. Based on discussions with Department and CDJFS management, the information not accurately entered into OB was due to oversight by the caseworker. We recommend the Department review existing controls and/or update policies and procedures at both the State and CDJFS to ensure the recipient information in OB is accurate. These procedures should include periodic reviews of the case files to reasonably ensure the applicant/eligibility information is accurately entered into the system. The Department should communicate to CDJFS management and staff the importance of these policies and procedures and implement or update existing monitoring controls to ensure these procedures are carried out as intended. Lastly, the Department should investigate the recipient specifically identified in this finding to ensure any necessary repayments are made or additional actions are taken.
SNAP CLUSTER AND TANF ? IEVS ALERTS Finding Number: 2022-013 State Agency Number: JFS-05 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2022 (SNAP Cluster) 222OH102S6018 / 2022 (SNAP Cluster) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Eligibility, Special Tests and Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-013 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001, and 2022-017 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.8(c), states the following regarding the Supplemental Nutrition Assistance Program (SNAP) Cluster: (1) State agency action on information items about recipient households shall include: (i) Review of the information and comparison of it to case record information; (ii) For all new or previously unverified information received, contact with the households and/or collateral contacts to resolve discrepancies as specified in ???273.2(f)(4)(iv) and 273.2 (f)(9)(iii) and (f)(9)(iv); and (iii) If discrepancies warrant reducing benefits or terminating eligibility, notices of adverse action. (2) State agencies must initiate and pursue the actions on recipient households specified in paragraph (c)(1) of this section so that the actions are completed within 45 days of receipt of the information items. Actions may be completed later than 45 days from the receipt of information if: (A) The only reason that the actions cannot be completed is the nonreceipt of verification requested from collateral contacts; and (B) The actions are completed as specified in ? 273.12 of this chapter when verification from a collateral contact is received or in conjunction with the next case action when such verification is not received, whichever is earlier. (3) When the actions specified in paragraph (c)(1) of this section substantiate an over issuance, State agencies must establish and take actions on claims as specified in ??273.18 of this chapter. (4) State agencies must use appropriate procedures to monitor the timeliness requirements in paragraph (c)(2) of this section. 45 C.F.R. ? 205.56(a)(1)(iv) states the following regarding the Temporary Assistance for Needy Families (TANF) program: For individuals who are recipients when the information is received or for whom a decision could not be made prior to authorization of benefits, the State agency shall within forty-five (45) days of its receipt, initiate a notice of case action or an entry in the case record that no case action is necessary, except that: Completion of action may be delayed beyond forty-five (45) days on no more than twenty (20) percent of the information items targeted for follow-up, if: (A) The reason that the action cannot be completed within forty-five (45) days is the nonreceipt of requested third-party verification; and (B) Action is completed promptly, when third party verification is received or at the next time eligibility is redetermined, whichever is earlier. If action is completed when eligibility is redetermined and third party verification has not been received, the State agency shall make its decision based on information provided by the recipient and any other information in its possession. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. The Ohio Benefits system is utilized for processing eligibility for the SNAP Cluster and TANF programs with total expenditures to recipients of approximately $4.5 billion and $204 million, respectively, in state fiscal year (SFY) 2022. The Ohio Benefits system, administered by the Ohio Department of Administrative Services (DAS) for various public assistance programs, includes an Income Eligibility Verification System (IEVS) which compares income, as reported by the recipients, to information maintained by outside sources. Information that does not agree is communicated in the form of an Ohio Benefits system alert, which is forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming Internal Revenue Service (IRS) alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct and monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts. Also, the JFSR 4005, IEVS Monthly Summary Report, continues to be monitored by the Department?s Fraud Control staff to better recognize those county agencies who require additional training and technical assistance; however, no evidence is documented or maintained. The Department also continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. Therefore, the Department did not have effective controls or procedures in place to review and monitor the IEVS alerts generated and processed by the Ohio Benefits system to ensure they were being completed by the counties in accordance with the requirements and timeframes established in 7 C.F.R. ? 272.8, and 45 C.F.R. ? 205.56. Furthermore, an Ohio Benefits report showed 349,020 of the 556,539 (63%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, for an average of 189 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframes increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that continue to reduce the number of alerts sent to county caseworkers. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to perform periodic and timely reviews at the Department level to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. Such procedures should also include required monitoring by each County IEVS Coordinator or other supervisory personnel (through the eligibility system), which should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to monitor the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper timeframes, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Continuing to conduct and evaluate statewide and individual IEVS training for county caseworkers to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system. These trainings should be mandatory for all county personnel involved in the alerts process. We also recommend Department management continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
SNAP CLUSTER AND TANF ? ELIGIBILITY SYSTEM Finding Number: 2022-017 State Agency Number: JFS-09 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-018 MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-013 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.10(b)(1)(i), pertaining to the SNAP Cluster, states in part, that a State?s system should: Determine eligibility and calculate benefits or validate the eligibility worker?s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members? names, addresses, dates of birth, social security numbers, individual household members? earned and unearned income by source, deductions, resources and household size) ? 45 C.F.R. ? 206.10(a), pertaining to public assistance programs, including TANF, states in part: ? (8) Each decision regarding eligibility or ineligibility will be supported by facts in the applicant?s or recipient?s case record? ? (12) The State agency shall establish and maintain methods by which it shall be kept currently informed about local agencies' adherence to the State plan provisions and to the State agency's procedural requirements for determining eligibility, and it shall take corrective action when necessary. As the lead agency responsible for administering the SNAP Cluster and TANF federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is also responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of nearly $4.7 billion in public assistance payments, to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients * 10.551/10.561 ? SNAP Cluster $ 4,465,389,555 1,502,137 93.558 ? TANF $ 203,674,740 73,104 Combined Total $ 4,669,064,295 1,575,241 * We did not separately identify recipients who could be covered under both programs These programs are administered using a multi-agency approach, as follows: overall compliance and administration of the SNAP Cluster and TANF programs fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration, Internal Revenue Service (IRS), etc.). The Department also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system for processing. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct, as well as monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts: these random reviews are looked at during the Fraud Triad Reviews. Also, the Department?s Fraud Control staff monitors the JFSR 4005, IEVS Monthly Summary Report to better recognize those county agencies which require additional training and technical assistance; however, no evidence of this monitoring is documented or maintained. ? Caseworker Reliance/Training ? The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. The Department continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. Failure to correct system weaknesses and system alerts creates an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s state supervised, county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to perform periodic and timely reviews of the JFSR 4005, IEVS Monthly Summary Report to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. The Department should also continue to perform monitoring reviews which should include verification that each County IEVS Coordinator, or other supervisory personnel, is conducting random reviews of the IEVS alerts (through the eligibility system) to determine the appropriate disposition of the alert and that it was worked timely. These random reviews should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. The Department should continue to provide this training initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
SNAP CLUSTER ? INELIGIBLE RECIPIENT Finding Number: 2022-011 State Agency Number: JFS-03 Assistance Listing Number and Title: 10.551/10.561 ? SNAP Cluster Federal Award Identification Number / Year: 202OH102S2514 / 2020 202OH102S6018 / 2020 212OH102S2514 / 2021 212OH102S6018 / 2021 222OH102S2514 / 2022 222OH102S6018 / 2022 Federal Agency: Department of Agriculture Compliance Requirement: Eligibility Repeat Finding from Prior Audit? No QUESTIONED COSTS 7 C.F.R. ?272.10(b)(1)(i), pertaining to the Supplemental Nutrition Assistance Program (SNAP) Cluster, states in part, that a State?s system should: Determine eligibility and calculate benefits or validate the eligibility worker?s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members? names, addresses, dates of birth, social security numbers, individual household members? earned and unearned income by source, deductions, resources and household size) ? Ohio Admin. Code (OAC) 5101:4-4-31(H) states: . . . When should actual income be used instead of converted income? When a full month's income is anticipated and income is received on a weekly or biweekly basis, the county agency shall determine monthly income by multiplying weekly amounts by 4.3 and biweekly amounts by 2.15. In one-month certifications, income on less than a monthly basis may be computed by using the actual income that is to be received. When income that was received on a weekly or biweekly basis has stopped, actual income (not converted) is used. As the lead agency responsible for administering the SNAP Cluster federal program for the State of Ohio, the Department is responsible for overall program compliance which includes ensuring only eligible individuals receive assistance and documentation maintained to support eligibility determinations is accurate, complete, and properly recorded in the Ohio Benefits (OB) system. It is the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the SNAP Cluster rules and regulations and only eligible recipients receive benefits. It is also the Department's responsibility to have appropriate oversight and monitoring procedures in place to ensure these controls, systems, processes and procedures are operating as intended and to comply with program guidelines and requirements. During state fiscal year 2022, the Department disbursed approximately $4.5 billion in federal assistance to eligible recipients from the SNAP Cluster program based on information provided by the 88 County Departments of Job and Family Services (CDJFS). The CDJFS caseworkers are responsible for obtaining the required eligibility information and entering it into OB in order for the application to be processed and the eligibility determination to be made. However, for one of 60 (1.67%) SNAP Cluster case files selected for testing at 10 CDJFS, totaling $592, the CDJFS (Montgomery) did not properly enter the income frequency into OB based on supporting documentation provided by the recipient. The caseworker entered the income frequency as `one-time?; however, it should have been `bi-weekly?. Therefore, the income was not converted correctly in accordance with OAC 5101:4-4-31 which resulted in an understatement of income and overcalculation of benefits. As such, we will question all benefits issued to the recipient totaling $3,629 (projected to an amount greater than $25,000). By not properly entering correct recipient income information into OB, inaccurate eligibility determinations could be made or recipient benefit issuance amounts could be miscalculated. If the Department does not consistently review the required documentation on file and in OB, the Department may not be able to fully support or ensure payments were made only to, or on behalf of, eligible recipients, and that the Department complied with all federal rules and regulations. This could result in additional questioned costs, a reduction in federal funding, or sanctions imposed by the federal grantor agency. Based on discussions with Department and CDJFS management, the information not accurately entered into OB was due to oversight by the caseworker. We recommend the Department review existing controls and/or update policies and procedures at both the State and CDJFS to ensure the recipient information in OB is accurate. These procedures should include periodic reviews of the case files to reasonably ensure the applicant/eligibility information is accurately entered into the system. The Department should communicate to CDJFS management and staff the importance of these policies and procedures and implement or update existing monitoring controls to ensure these procedures are carried out as intended. Lastly, the Department should investigate the recipient specifically identified in this finding to ensure any necessary repayments are made or additional actions are taken.
SNAP CLUSTER AND TANF ? IEVS ALERTS Finding Number: 2022-013 State Agency Number: JFS-05 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2022 (SNAP Cluster) 222OH102S6018 / 2022 (SNAP Cluster) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Eligibility, Special Tests and Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-013 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001, and 2022-017 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.8(c), states the following regarding the Supplemental Nutrition Assistance Program (SNAP) Cluster: (1) State agency action on information items about recipient households shall include: (i) Review of the information and comparison of it to case record information; (ii) For all new or previously unverified information received, contact with the households and/or collateral contacts to resolve discrepancies as specified in ???273.2(f)(4)(iv) and 273.2 (f)(9)(iii) and (f)(9)(iv); and (iii) If discrepancies warrant reducing benefits or terminating eligibility, notices of adverse action. (2) State agencies must initiate and pursue the actions on recipient households specified in paragraph (c)(1) of this section so that the actions are completed within 45 days of receipt of the information items. Actions may be completed later than 45 days from the receipt of information if: (A) The only reason that the actions cannot be completed is the nonreceipt of verification requested from collateral contacts; and (B) The actions are completed as specified in ? 273.12 of this chapter when verification from a collateral contact is received or in conjunction with the next case action when such verification is not received, whichever is earlier. (3) When the actions specified in paragraph (c)(1) of this section substantiate an over issuance, State agencies must establish and take actions on claims as specified in ??273.18 of this chapter. (4) State agencies must use appropriate procedures to monitor the timeliness requirements in paragraph (c)(2) of this section. 45 C.F.R. ? 205.56(a)(1)(iv) states the following regarding the Temporary Assistance for Needy Families (TANF) program: For individuals who are recipients when the information is received or for whom a decision could not be made prior to authorization of benefits, the State agency shall within forty-five (45) days of its receipt, initiate a notice of case action or an entry in the case record that no case action is necessary, except that: Completion of action may be delayed beyond forty-five (45) days on no more than twenty (20) percent of the information items targeted for follow-up, if: (A) The reason that the action cannot be completed within forty-five (45) days is the nonreceipt of requested third-party verification; and (B) Action is completed promptly, when third party verification is received or at the next time eligibility is redetermined, whichever is earlier. If action is completed when eligibility is redetermined and third party verification has not been received, the State agency shall make its decision based on information provided by the recipient and any other information in its possession. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. The Ohio Benefits system is utilized for processing eligibility for the SNAP Cluster and TANF programs with total expenditures to recipients of approximately $4.5 billion and $204 million, respectively, in state fiscal year (SFY) 2022. The Ohio Benefits system, administered by the Ohio Department of Administrative Services (DAS) for various public assistance programs, includes an Income Eligibility Verification System (IEVS) which compares income, as reported by the recipients, to information maintained by outside sources. Information that does not agree is communicated in the form of an Ohio Benefits system alert, which is forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming Internal Revenue Service (IRS) alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct and monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts. Also, the JFSR 4005, IEVS Monthly Summary Report, continues to be monitored by the Department?s Fraud Control staff to better recognize those county agencies who require additional training and technical assistance; however, no evidence is documented or maintained. The Department also continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. Therefore, the Department did not have effective controls or procedures in place to review and monitor the IEVS alerts generated and processed by the Ohio Benefits system to ensure they were being completed by the counties in accordance with the requirements and timeframes established in 7 C.F.R. ? 272.8, and 45 C.F.R. ? 205.56. Furthermore, an Ohio Benefits report showed 349,020 of the 556,539 (63%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, for an average of 189 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframes increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that continue to reduce the number of alerts sent to county caseworkers. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to perform periodic and timely reviews at the Department level to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. Such procedures should also include required monitoring by each County IEVS Coordinator or other supervisory personnel (through the eligibility system), which should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to monitor the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper timeframes, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Continuing to conduct and evaluate statewide and individual IEVS training for county caseworkers to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system. These trainings should be mandatory for all county personnel involved in the alerts process. We also recommend Department management continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
SNAP CLUSTER AND TANF ? ELIGIBILITY SYSTEM Finding Number: 2022-017 State Agency Number: JFS-09 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-018 MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-013 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.10(b)(1)(i), pertaining to the SNAP Cluster, states in part, that a State?s system should: Determine eligibility and calculate benefits or validate the eligibility worker?s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members? names, addresses, dates of birth, social security numbers, individual household members? earned and unearned income by source, deductions, resources and household size) ? 45 C.F.R. ? 206.10(a), pertaining to public assistance programs, including TANF, states in part: ? (8) Each decision regarding eligibility or ineligibility will be supported by facts in the applicant?s or recipient?s case record? ? (12) The State agency shall establish and maintain methods by which it shall be kept currently informed about local agencies' adherence to the State plan provisions and to the State agency's procedural requirements for determining eligibility, and it shall take corrective action when necessary. As the lead agency responsible for administering the SNAP Cluster and TANF federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is also responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of nearly $4.7 billion in public assistance payments, to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients * 10.551/10.561 ? SNAP Cluster $ 4,465,389,555 1,502,137 93.558 ? TANF $ 203,674,740 73,104 Combined Total $ 4,669,064,295 1,575,241 * We did not separately identify recipients who could be covered under both programs These programs are administered using a multi-agency approach, as follows: overall compliance and administration of the SNAP Cluster and TANF programs fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration, Internal Revenue Service (IRS), etc.). The Department also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system for processing. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct, as well as monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts: these random reviews are looked at during the Fraud Triad Reviews. Also, the Department?s Fraud Control staff monitors the JFSR 4005, IEVS Monthly Summary Report to better recognize those county agencies which require additional training and technical assistance; however, no evidence of this monitoring is documented or maintained. ? Caseworker Reliance/Training ? The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. The Department continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. Failure to correct system weaknesses and system alerts creates an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s state supervised, county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to perform periodic and timely reviews of the JFSR 4005, IEVS Monthly Summary Report to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. The Department should also continue to perform monitoring reviews which should include verification that each County IEVS Coordinator, or other supervisory personnel, is conducting random reviews of the IEVS alerts (through the eligibility system) to determine the appropriate disposition of the alert and that it was worked timely. These random reviews should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. The Department should continue to provide this training initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
CDBG ? REPORTING Finding Number: 2022-003 State Agency Number: DEV-02 Assistance Listing Number and Title: 14.228 ? Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii (CDBG) Federal Award Identification Number / Year: B-16-DC-39-0001 / 2016 B-17-DC-39-0001 / 2017 B-18-DC-39-0001 / 2018 B-19-DC-39-0001 / 2019 B-20-DC-39-0001 / 2020 Federal Agency: Department of Housing and Urban Development Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 24 C.F.R. Part 91 ? 520 states, in part: (a) General. Each jurisdiction that has an approved consolidated plan shall annually review and report, in a form prescribed by HUD [U.S. Department of Housing and Urban Development], on the progress it has made in carrying out its strategic plan and its action plan. The performance report must include a description of the resources made available, the investment of available resources, the geographic distribution and location of investments, the families and persons assisted (including the racial and ethnic status of persons assisted), actions taken to affirmatively further fair housing, and other actions indicated in the strategic plan and the action plan? ? (d) CDBG. For CDBG recipients, the report shall include a description of the use of CDBG funds during the program year and an assessment by the jurisdiction of the relationship of that use to the priorities and specific objectives identified in the plan, giving special attention to the highest priority activities that were identified? To provide guidance on the prescribed performance report format, HUD issued Notice CPD-21-11 which outlines the format of the Consolidated Annual Performance and Evaluation Report (CAPER), including the PR28 Financial Summary Report. Information captured in the report includes sources of CDBG funds and vouchers made against those sources for all open annual State CDBG grants. It is management?s responsibility to implement procedures to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with the program requirements. It is imperative that management monitor these procedures, as well as maintain the underlying data and documentation used to support the information contained within the reports. The Department compiles the CAPER?s PR28 Financial Summary Report, using financial data from the Department?s OCEAN system which is used to track and maintain information on subgrant activity, including information on amounts drawn from HUD?s Integrated Disbursement and Information System (IDIS) against active Federal grants. Once prepared, the report is reviewed by the Deputy Chief of the Department?s Office of Community Development and submitted to HUD. However, the Department could not provide the supporting documentation used to compile the CAPER and PR28 reports submitted during the audit period. As an alternative method to ensure accuracy of the amounts reported for annual State CDBG grants in the PR28 report, we compared them to information obtained from the State?s accounting system, the Ohio Administrative Knowledge System. The following variances were noted: Grant Year FAIN Amounts Drawn per PR28 Report Amounts Drawn per OAKS Variance 2016 B-16-DC-39-0001 $ 41,063,331 $ 41,151,241 $ 87,910 0.21% 2017 B-17-DC-39-0001 $ 39,629,560 $ 39,803,352 $ 173,792 0.44% 2018 B-18-DC-39-0001 $ 44,508,253 $ 43,100,790 $ (1,407,463) -3.26% 2019 B-19-DC-39-0001 $ 36,138,582 $ 35,589,654 $ (548,928) -1.54% 2020 B-20-DC-39-0001 $ 23,968,274 $ 21,828,742 $ (2,139,532) -15.18% Inadequate internal control procedures governing the retention of information used to prepare federal reports increases the risk of inaccurate reporting to the federal grantor agency. Inaccurate and incomplete reporting could subject the Department to fines, penalties, or a reduction of federal funding. Based on discussions with management, the original supporting documentation could not be located due to turnover at the employee position responsible for preparing the report. Additionally, the OCEAN system does not allow the Department to re-run the reports used as of a historical date. We recommend the Department evaluate and update its existing procedures regarding record retention surrounding federal reports, if necessary, to provide reasonable assurance the data being reported for the CDBG program is accurate and properly supported. We further recommend the Department consider updating the OCEAN system to allow for producing historical reports, as well as consider using the OAKS or IDIS financial data to compile the report and/or to help ensure completeness of the data from OCEAN prior to submitting the report to the federal grantor agency. Management should periodically review and monitor these procedures to ensure they are operating effectively and as intended.
CDBG AND LIHEAP ? TRANSPARENCY ACT REPORTING Finding Number: 2022-004 State Agency Number: DEV-03 Assistance Listing Number and Title: 14.228 Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii (CDBG) 93.568 Low-Income Home Energy Assistance Program (LIHEAP) Federal Award Identification Number / Year: B-21-DC-39-0001 / 2021 (CDBG) 2101OHLIEA / 2021 (LIHEAP) Federal Agencies: Department of Housing and Urban Development Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-005 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department disbursed approximately $89 million for 236 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs: Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 14.228 CDBG 83 $27,193,724 93.568 LIHEAP 153 $61,742,923 The Department?s Finance Division managed Transparency Act reporting for all applicable programs, overseen by the Grant Strategy Manager. A tracking spreadsheet is maintained with all grants required to be reported or updated on the FSRS website with the key data elements required by the Transparency Act. The information within this spreadsheet is compiled from reports generated by the OCEAN system which the Department uses to track and maintain information on subgrant activity. Information within OCEAN is compiled by the grants personnel responsible for each federal program at the Department as well as through reporting via web interface by the subgrantee. However, there is no supervisory review of the Transparency Act reports prior to submission on the FSRS website. Further, the control procedures were not operating effectively and as a result, the following errors were noted for CDBG and LIHEAP: CDBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 3 9 3 3 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $3,016,000 $470,000 $3,016,000 $470,000 $470,000 LIHEAP Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 15 10 15 10 10 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,311,919 $ 4,728,604 $6,311,919 $4,728,604 $ 4,728,604 A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act Reports could be relying on inaccurate information. Based on discussions with management, the errors were due to beginning implementation of the reporting process late in the audit period. Additionally, the Department experienced difficulty in identifying all subawards made amongst the different offices responsible for administering federal awards, as well as obtaining all subaward information required to be reported under the Transparency Act. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards subject to the Transparency Act. We also recommend the Department continue implementation of its Transparency Act reporting process, including the process by which subawards are identified. Management should consider incorporating the input of the applicable offices within the Department to improve the process for identifying subawards and the key data elements for reporting, as well as the timeliness of reporting within the FSRS system. Management should periodically review these procedures to ensure they promote compliance with federal regulations and are operating as intended.
EMERGENCY SOLUTIONS GRANTS PROGRAM ? OBLIGATION REQUIREMENTS Finding Number: 2022-002 State Agency Number: DEV-01 Assistance Listing Number and Title: 14.231 Emergency Solutions Grants Program Federal Award Identification Number / Year: E-21-DC-39-0001 / 2021 Federal Agency: Department of Housing and Urban Development Compliance Requirement: Special Tests and Provisions - Obligation, Expenditure and Payment Requirements Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 24 C.F.R. Part 576 ? 203 (a) relates to obligation requirements for the Emergency Solutions Grants Program (ESGP) and states, in part: Obligation of funds. (1) Funds allocated to States. (i) Within 60 days from the date that HUD [U.S. Department of Housing and Urban Development] signs the grant agreement with the State (or grant amendment for reallocated funds), the recipient must obligate the entire grant, except the amount for its administrative costs. This requirement is met by a subgrant agreement with, or a letter of award requiring payment from the grant to, a subrecipient. . . . It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During the audit period, the Department was awarded approximately $6.2 million in ESGP funding for the 2021 federal program year. ESGP is funded on a biennial basis, with new awards typically granted in odd-numbered years. The Department?s allocation and award of program funds to subrecipients involves the creation of an annual Consolidated Plan submitted to HUD, a subrecipient pre-application eligibility review, final allocation of program funds, and approval of the finalized subgrant agreement. However, four of four (100%) ESGP subgrant agreements entered into during the audit period that were selected for testing were obligated late. The number of days late ranged from 237 to 257, with an average of 245. Without procedures in place to ensure timely obligation of funds in accordance with federal requirements, the Department could face a reduction or elimination of funding, or other penalties or sanctions imposed by the federal grantor agency. Based on discussions with management, there have been difficulties complying with this requirement due to the short length of time given to obligate funds without impacting the overall experience of subrecipients or overall compliance with other program requirements. Management indicated they are in ongoing communication with HUD to resolve the matter. We recommend the Department review and evaluate its current ESGP subgrant award process for redundancies or areas where time savings can be implemented. The Department should also identify areas of the process that could be completed prior to the federal grantor agency awarding the funds. Management should also periodically monitor these processes and procedures to ensure they are operating effectively and meeting their objectives.
UNEMPLOYMENT INSURANCE ? FRAUD ISSUES AND OVERPAYMENTS Finding Number: 2022-012 State Agency Number: JFS-04 Assistance Listing Number and Title: 17.225 ? Unemployment Insurance 17.225 COVID-19 ? Unemployment Insurance Federal Award Identification Number / Year: UI-34078-20-55-A-39 / 2020 UI-35668-21-55-A-39 / 2021 UI-37243-22-55-A-39 / 2022 Federal Agency: Department of Labor Compliance Requirement: Special Tests and Provisions ? UI Program Integrity ? Overpayments Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-012 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-009 and 2022-010 detail questioned costs, noncompliance, and weaknesses in internal control related to the regular and pandemic Unemployment Insurance programs regarding fraud issues and overpayments. These findings are integral to and should be read in conjunction with this finding. The U.S. Department of Labor?s (DOL) Unemployment Program Insurance Letter (UIPL) No. 23-20 provides additional guidance to states regarding program integrity for the regular UI program and for the UI programs authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. UIPL 23-20, (4)(b) Program integrity functions for the regular UI programs and CARES Act programs, states, in part: ? The following BPC [Benefit Payment Control] activities are mandatory for states to implement for the regular UI programs on an ongoing basis. States must implement these functions for the Pandemic Emergency Unemployment Compensation (PEUC) and PUA [Pandemic Unemployment Assistance] programs in the same manner as for the regular UI programs. ? National Directory of New Hires Cross-match (UIPL Nos. 13-19 and 19-11). UIPL 13-19 provides detailed, recommended operating procedures for cross-matching with state and national directories of new hire data; ? Quarterly Wage Records Cross-match (20 CFR Section 603.23); and ? Systematic Alien Verification for Entitlement (SAVE) (Section 1137(d) of the Social Security Act (SSA) (42 U.S.C. Section1320b-7). The Department strongly recommends the following additional BPC activities as part of a state?s effective BPC operation for the regular UI programs, PUA and PEUC: ? State Directory of New Hires Cross-match; ? Social Security Administration (SSA) Cross-match; ? Interstate Benefits (IB) Cross-match; ? State Identification Inquiry (SID) and IB8606 enhancements made to the Interstate Connection (ICON) network cross match to prevent concurrent claim filing in multiple states; ? State Information Data Exchange System (SIDES); ? Identity Verification; ? Incarceration Cross-match; and, ? UI Integrity Center?s Integrity Data Hub (IDH) tools including Suspicious Actor Repository (SAR), Suspicious E-Mail Domains, Multi-State Cross-Match (MSCM), Foreign Internet Protocol (IP) Address Detection, and Fraud Alert application. 20 C.F.R. ? 625.14 pertaining to overpayments and disqualifications for fraud states, in part: . . . (h) Fraud Detection and prevention. Provisions in the procedures of each State with respect to detection and prevention of fraudulent overpayments of DUA [Disaster Unemployment Assistance] shall be, as a minimum, commensurate with the procedures adopted by the State with respect to regular compensation and consistent with the Secretary's ?Standard for Fraud and Overpayment Detection,? . . . UIPL No. 2-12, Change 1 provides additional guidance to states regarding program integrity for the regular UI program and amendments made by the Trade Adjustment Assistance Extension Act of 2011 (TAAEA) and states, in part: a. Require states to impose a monetary penalty (an amount not less than 15 percent of the erroneous payment) on claimants whose fraudulent acts resulted in overpayments; b. Prohibit states from providing relief from charges to an employer?s UC [Unemployment Compensation] account when a UC overpayment results from an employer (or an employer?s agent) failing to respond timely or adequately to a request for information by the state agency (i.e., employer or agent at fault), and, at minimum, the employer (or its agent) has established a pattern of failing to respond to such requests; and . . . Ohio Rev. Code ? 4141.35 states, in part: (A) If the director of job and family services finds that any fraudulent misrepresentation has been made by an applicant for or a recipient of benefits with the object of obtaining benefits to which the applicant or recipient was not entitled, and in addition to any other penalty or forfeiture under this chapter, then the director: (1) Shall within four years after the end of the benefit year in which the fraudulent misrepresentation was made reject or cancel such person's entire weekly claim for benefits that was fraudulently claimed, or the person's entire benefit rights if the misrepresentation was in connection with the filing of the claimant's application for determination of benefit rights; (2) Shall by order declare that, for each application for benefit rights and for each weekly claim canceled, such person shall be ineligible for two otherwise valid weekly claims for benefits, claimed within six years subsequent to the discovery of such misrepresentation; (3) By order shall require that the total amount of benefits rejected or canceled under division (A)(1) of this section be repaid to the director before such person may become eligible for further benefits, and shall withhold such unpaid sums from future benefit payments accruing and otherwise payable to such claimant. . . . (B) If the director finds that an applicant for benefits has been credited with a waiting period or paid benefits to which the applicant was not entitled for reasons other than fraudulent misrepresentation, the director shall: (1)(a) Within six months after the determination under which the claimant was credited with that waiting period or paid benefits becomes final pursuant to section 4141.28 of the Revised Code, or within three years after the end of the benefit year in which such benefits were claimed, whichever is later, by order cancel such waiting period and require that such benefits be repaid to the director or be withheld from any benefits to which such applicant is or may become entitled before any additional benefits are paid, provided that the repayment or withholding shall not be required where the overpayment is the result of the director's correcting a prior decision due to a typographical or clerical error in the director's prior decision, or an error in an employer's report under division (G) of section 4141.28 of the Revised Code. . . . Any overpayments made to the individual that have not previously been recovered under an unemployment benefit program of the United States may be recovered in accordance with section 303(g) of the "Social Security Act" and sections 3304(a)(4) and 3306(f) of the "Federal Unemployment Tax Act," 53 Stat. 183 (1939), 26 U.S.C.A. 3301 to 3311. . . . Ohio Rev. Code ? 131.02(A) states, in part: . . . if the amount is not paid within forty-five days after payment is due, the officer, employee, or agent shall certify the amount due to the attorney general, in the form and manner prescribed by the attorney general, and notify the director of budget and management thereof. . . . . UIPL No. 20-21 provides States instructions for assessing fraud penalties and processing overpayment waivers under the CARES Act, as amended. States must establish eligibility criteria for PUA, Federal Pandemic Unemployment Compensation (FPUC), Mixed Earners Unemployment Compensation (MEUC), and PEUC. In general, States are permitted to waive repayment if the overpayment identified was not the claimant's fault and the payment would be contrary to equity and good conscience. In addition, UIPL 20-21 states, in part: Application of a minimum 15 percent monetary penalty. Within the context of the CARES Act, states must apply a minimum 15 percent monetary penalty to an individual?s overpayment when the state determines that such an overpayment was made to an individual due to fraud. Fraud includes instances where an individual knowingly has made, or caused to be made by another, a false statement or representation of a material fact, or knowingly has failed, or caused another to fail, to disclose a material fact. This fraud penalty is applicable to PUA, FPUC, MEUC, PEUC, and the first week of regular UC that is reimbursed in accordance with Section 2105 of the CARES Act? States must apply the fraud monetary penalty for FPUC, MEUC, PEUC, and the first week of regular UC that is reimbursed in accordance with Section 2105 of the CARES Act for all fraud overpayments established on or after the date of publication for this UIPL [May 5, 2021]. It is management?s responsibility to design and implement internal control procedures to ensure compliance with UI program requirements outlined in the federal rules, regulations, and guidance, as well as state laws that govern the program. During state fiscal year (SFY) 2022, the Department disbursed approximately $1.69 billion in UI benefits processed through the Ohio Job Insurance (OJI) and uFACTS systems for the regular Unemployment and pandemic Unemployment programs. The OJI and uFACTS systems automatically generate the cross-match reports as required per UIPL No. 23-20; however, due to the COVID-19 pandemic, the Department had a significant backlog of potential overpayment issues during the audit period causing significant delays in processing time. An issue is created when the system cannot determine the impact of the benefit claim or is created based off of cross-matches. Issues suspected of fraud are forwarded to the Department?s Bureau of Payment Control to be investigated and then adjudicated. An Adjudicator reviews information, known as fact-finding, to make a determination on the benefit claim within 21-days per the Department?s Unemployment Compensation Policy Guide which is based on /a CORE Measure established by the DOL related to timeliness of the nonmonetary determinations for States. Once a determination is made, a Determination Notice or Notice of Overpayment is sent to the claimant. Due to the COVID-19 pandemic, the Department experienced a significant increase in the number of weekly unemployment benefit claims issued through the OJI and uFACTS systems (2,982,414 and 2,260,024, respectively during the year) which had a direct impact on the increase of fraud issues detected. The Department adjudicated 18,314 fraudulent claims for OJI and 293,781 fraudulent claims for uFACTS during SFY 2022. However, the process and/or requirements were not consistently followed, as noted below: ? Of the 25 OJI adjudicated fraud issues selected for testing: - 22 (88%) Notice of Determination/Notice of Overpayments were not issued within 21-days. Days late between the issue determination date and the Notice of Determination/Notice of Overpayment, ranged from 10 to 639 days, for an average of 232 days late. Three of these claims also had payments issued for the claim more than 21 days after the issue determination date. - 12 (48%) were not detected/flagged timely (30 days based on auditor?s judgement) from the benefit week ending date. Days late between the benefit week ending date and the date of issue, ranged from four to 487 days, for an average of 215 days late. - Nine (36%) were not sent the fact-finding questionnaire timely (seven days from the issue determination date based on auditor?s judgement). Days late between the issue determination date and the fact-finding ranged from 20 to 494 days, for an average of 158 days late. ? Of the 25 uFACTS adjudicated fraud issues selected for testing: - 16 (64%) Notice of Determination/Notice of Overpayments were not issued within 21-days. Days late between the issue determination date and the Notice of Determination/Notice of Overpayment ranged from 64 to 379 days, for an average of 196 days late. - 14 (56%) were not detected/flagged timely (30 days based on auditor?s judgement) from the benefit week ending date. Days late between the benefit week ending date and the date of issue ranged from 89 to 578 days, for an average of 334 days late. - Two (8%) were not sent the fact-finding questionnaire timely (seven days from the issue determination date based on auditor?s judgment). Days late between the issue determination date and the fact-finding were three and eight days, for an average of six days late. - Two (8%) did not have a stop payment completed timely (seven days from the issue determination date based on auditor's judgment). Days late between the issue determination date and the last paid claim were 180 and 366 days, for an average of 273 days late. Once an issue has been adjudicated, the Department?s Bureau of Payment Control is responsible for determining the claimant?s benefit overpayment and issues a Notice of Overpayment. Overpayments are benefits paid to individuals who are not legally entitled to receive these benefits. Losses through embezzlement or by theft, other than through the benefit payment process, are not counted as overpayments. Overpayments are reported to the DOL in the quarter and/or month in which they occur, which is once adjudication is complete. A fraud overpayment occurs when the material facts related to a determination or payment of a claim are found during the adjudication process to be knowingly misrepresented or concealed (i.e., willful misrepresentation) by the claimant in order to obtain benefits to which the individual is not legally entitled. A non-fraud overpayment occurs when the state agency determines, through adjudication, the overpayment is not due to willful misrepresentations. Non-fraud overpayments result from reversals, state agency errors, employer errors, and claimant errors. The Department reported approximately $598.2 million in fraudulent outstanding overpayments and $2.17 billion in non-fraudulent outstanding overpayments processed through OJI and uFACTS to the DOL as of June 30, 2022. If overpayments are based on fraud, the OJI and uFACTS systems are to automatically include a 15% penalty, as required by UPIL No. 20-21. The Department then notifies the claimant of the monetary penalties, attempts to collect the penalties, and deposits the penalties collected into the State?s Unemployment Trust Fund. Although the Department appropriately assessed a 15% monetary penalty for PUA and FPUC claims processed through uFACTS during SFY 2022, the Department did not assess the 15% monetary penalty for any FPUC overpayments processed through the OJI system. The Department attempts to collect overpayments by sending an appealable overpayment determination to the claimant. If repayment is not received within 45 days after the payment is due, the amount is certified to the Ohio Attorney General for collection pursuant to Ohio Rev. Code ?131.02. The federal government gave discretion to states to waive the need for a repayment of pandemic funding related to non-fraud overpayments, but claimants must request the waiver from the Department to avoid repayment. During SFY 2022, the Department processed 111,697 overpayment waiver requests and waived repayment of approximately $172.6 million based on approved claimant requests or other waivers. During SFY 2022, the Department certified the fraud and non-fraud overpayments processed through OJI to the Ohio Attorney General for collection; however, the Department only certified 1,000 overpayments processed through uFACTS, totaling $59,526, to the Ohio Attorney General for collection based on its manual process. The Department determined the manual process was too labor intensive and stopped certifying uFACTS overpayments to the Ohio Attorney General for collection until an automated process was developed and implemented in October 2022, after the end of the audit period. Additionally, the Department has flagged approximately $1.08 billion in potential overpayments for the regular Unemployment and the pandemic Unemployment programs as of June 30, 2022. Despite being flagged as potential overpayments, a final determination as to whether these are overpayments and/or fraudulent cannot be made until these claims are fully adjudicated. Without proper controls to ensure the timely identification of fraud issues and the adjudication of fraudulent and non-fraudulent issues and overpayment determinations (if applicable), the Department increases the risk of inaccurate or incomplete financial and/or programmatic activity being reported to the federal grantor agency. Furthermore, the Department is limiting the amount of funding available for program activities by not certifying and pursuing collection of the Unemployment benefit overpayments for the pandemic Unemployment programs, as well as by not properly assessing the monetary penalty to fraudulent FPUC claims processed through OJI. Based on discussions with management, these errors are due to the amount of time and effort necessary to adjudicate fraud and process the high volume of backlog of claims and potential overpayments, time necessary to implement system improvements, and oversight. We recommend the Department continue to evaluate, strengthen, and monitor internal controls and procedures related to UI fraud and overpayments to ensure they are working as management intended, including, but not limited to: ? Periodic management reviews of the cross-match documentation to ensure the matches are being performed timely and as intended. If the information necessary to complete the cross-matches is obtained from an outside party, the Department should work with the entity to ensure the information is obtained timely. Additionally, the Department should continue to prioritize issues based on the aging of issues created by the cross-matches, monitor the issue backlog, ensure issues are being addressed timely, and the Notices of Determination are issued in a timely manner. ? Periodic management reviews over the timing of the fact-finding questionnaires generated by the OJI and/or uFACTS systems once an issue has been created. ? Periodic management reviews over the certification of OJI and uFACTS overpayments to the Ohio Attorney General and subsequent collections. ? System enhancements within OJI to ensure the monetary fraud overpayment penalty amounts are being applied to each applicable overpayment. Management should monitor the system enhancements to ensure they are being captured, properly applied, and appropriately collected.
UNEMPLOYMENT INSURANCE ? DEATH FILE AND INCARCERATION CROSS-MATCHES Finding Number: 2022-009 State Agency Number: JFS-01 Assistance Listing Number and Title: 17.225 ? Unemployment Insurance 17.225 COVID-19 ? Unemployment Insurance Federal Award Identification Number / Year: UI-32619-19-55-A-39 / 2019 UI-34078-20-55-A-39 / 2020 UI-35668-21-55-A-39 / 2021 UI-37243-22-55-A-39 / 2022 Federal Agency: Department of Labor Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Costs Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-011 QUESTIONED COSTS AND SIGNIFICANT DEFICIENCY NOTE: Finding numbers 2022-010 and 2022-012 detail questioned costs, noncompliance, and weaknesses in internal control related to the regular and pandemic Unemployment Insurance programs regarding fraud issues and overpayments. These findings are integral to and should be read in conjunction with this finding. 2 C.F.R. ? 2900.4 gives regulatory effect to the Department of Labor for 2 C.F.R. ? 200.1 which states, in part: . . . Improper Payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (i) Incorrect amounts are overpayments or underpayments that are made to eligible recipients (including inappropriate denials of payment or service, any payment that does not account for credit for applicable discounts, payments that are for an incorrect amount, and duplicate payments). An improper payment also includes any payment that was made to an ineligible recipient or for an ineligible good or service, or payments for goods or services not received (except for such payments authorized by law). ? The Department of Labor?s Unemployment Insurance Program Letter (UIPL) No. 23-20 provides additional guidance to states regarding program integrity for the regular UI program and for the UI programs authorized by the CARES Act, enacted on March 27, 2020. UIPL 23-20, (4)(b) Program integrity functions for the regular UI programs and CARES Act programs states, in part: . . . The following BPC [Benefit Payment Control] activities are mandatory for states to implement for the regular UI programs on an ongoing basis. States must implement these functions for the PEUC [Pandemic Emergency Unemployment Compensation] and PUA [Pandemic Unemployment Assistance] programs in the same manner as for the regular UI programs. ? National Directory of New Hires Cross-match (UIPL Nos. 13-19 and 19-11). UIPL 13-19 provides detailed, recommended operating procedures for crossmatching with state and national directories of new hire data; ? Quarterly Wage Records Cross-match (20 CFR ? 603.23); and ? Systematic Alien Verification for Entitlement (SAVE) (Section 1137(d) of the Social Security Act (SSA) (42 U.S.C. ?1320b-7). The Department [of Labor] strongly recommends the following additional BPC activities as part of a state?s effective BPC operation for the regular UI programs, PUA, and PEUC: ? State Directory of New Hires Cross-match; ? Social Security Administration (SSA) Cross-match; ? Interstate Benefits (IB) Cross-match; ? State Identification Inquiry (SID) and IB8606 enhancements made to the Interstate Connection (ICON) network cross match to prevent concurrent claim filing in multiple states; ? State Information Data Exchange System (SIDES) (Training and Employment Notice No. 12-16); ? Identity Verification; ? Incarceration Cross-match; and ? UI Integrity Center?s Integrity Data Hub (IDH) tools including the Suspicious Actor Repository (SAR), Suspicious E-Mail Domains, Multi-State Cross-Match (MSCM), Foreign Internet Protocol (IP) Address Detection, and Fraud Alert application. It is management?s responsibility to reasonably ensure control procedures are in place and operating effectively to prevent benefits from being paid to individuals who do not meet the eligibility requirements for the UI program. During state fiscal year (SFY) 2022, the Department disbursed more than $1.69 billion in Unemployment benefits. Approximately $476.7 million of the total disbursed related to pandemic Unemployment benefit payments issued through the uFACTS system and $1.21 billion of the total disbursed related to regular Unemployment benefit payments issued through the Ohio Job Insurance (OJI) system. The Department implemented the BPC cross-matches for the pandemic Unemployment benefit payments in uFACTS, as required by UIPL 23-30, in February 2021 for the Innovate Ohio matches (e.g, Death, Inmate, Nursing Home, and State Employee) and May 2021 for the SSA cross-matches. In addition, the Department implemented the cross-matches for SSA and Incarceration in OJI in May 2021. In response to the COVID-19 pandemic, the Department implemented Lexis Nexis (uFACTS) and Experian (OJI) ID verification tools in late March/early April 2021; both of which factor in death when performing ID verification protocols. The Department receives death data from the Ohio Department of Health and incarceration data from the Ohio Department of Rehabilitation and Correction on a weekly basis. Cross-matches with this data are performed using the Department?s online dashboard based on default settings. The results of these cross-matches are displayed on the dashboard, which the Department?s Benefit Payment Control section staff are tasked with reviewing. However, a point in time results file that can be saved or archived for future review is not generated. Information contained in the dashboard is dynamic and is updated constantly as new data is received. No documentation was available to evidence a review process or any actions taken as a result of the dashboard cross-matches. An analysis of Unemployment benefits paid during SFY 2022 compared to data files received from the Ohio Department of Health and the Ohio Department of Rehabilitation and Correction identified $2,169,454 in benefits paid to individuals who were either deceased or incarcerated prior to the benefit week ending date associated with the benefit payments, as detailed below. Deceased Prior to Benefit Week Ending Date: ? 258 weekly claims transactions relating to 47 individual claimants, totaling $75,313 from the uFACTS system. ? 114 weekly claims transactions relating to 27 individual claimants, totaling $38,924 from the OJI system. Incarcerated Prior to Benefit Week Ending Date: The incarceration file utilized in this analysis was for the period of 3/1/2020 through 2/28/21; we were unable to obtain an incarceration file for SFY 2022 containing inmate social security numbers, a data element critical to the performance of our analysis. Therefore, the file utilized did not include individuals incarcerated, or take into account those who received early release after 2/28/21. Our analysis compared the OJI and uFACTS claims paid during SFY 2022 to the incarceration file. This comparison identified Unemployment benefits paid to individuals during SFY 2022 where the benefit week ending date was after their incarceration date and before their expected release date. These results did not exclude partial eligibility where the date of death or incarceration occurred in the benefit week. ? 5,717 weekly claims transactions relating to 303 individual claimants, totaling $1,992,919 from the uFACTS system. ? 239 weekly claims transactions relating to 16 individual claimants, totaling $62,298 from the OJI system. As such, we will question all benefit payments made to individuals who were either deceased or incarcerated prior to the benefit week ending date, totaling $2,169,454. Anomalies in the date and name fields contained in the OJI and uFACTS files provided by the Department, the social security number field being limited to the last four digits in the death file provided by the Ohio Department of Health, the unavailability of an updated incarceration file from the Ohio Department of Rehabilitation and Correction, and variables in the date fields contained in the incarceration file utilized limited our ability to place a high level of reliance on the completeness and accuracy of the above mentioned results. However, these results indicate the controls included in the system are not working effectively, resulting in unallowable payments to ineligible recipients. Without effective internal control procedures and cross-matching against reliable death records or incarcerated data prior to payment, there is an increased risk that inaccurate or unallowable benefit payments will be made. Overpayments to ineligible claimants may subject the Department to penalties or sanctions from the federal grantor agency which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. We recommend the Department evaluate and strengthen current cross-matching internal control procedures, including those related to deceased and incarcerated individuals, to help identify potential ineligible individuals prior to making payments. These internal controls should formally define the frequency of review, the expected output/results file, and a process to investigate, document, track, and maintain documentation related to any actions taken as a result of the cross-match. Working with the Ohio Department of Health and the Ohio Department of Rehabilitation and Correction will be required to obtain reliable death and incarceration records. We further recommend the Department perform procedures to identify improper payments already made to deceased and incarcerated individuals and seek recovery, reimbursement, or offset future benefits, where necessary.
UNEMPLOYMENT INSURANCE ? FRAUD ISSUES AND OVERPAYMENTS Finding Number: 2022-012 State Agency Number: JFS-04 Assistance Listing Number and Title: 17.225 ? Unemployment Insurance 17.225 COVID-19 ? Unemployment Insurance Federal Award Identification Number / Year: UI-34078-20-55-A-39 / 2020 UI-35668-21-55-A-39 / 2021 UI-37243-22-55-A-39 / 2022 Federal Agency: Department of Labor Compliance Requirement: Special Tests and Provisions ? UI Program Integrity ? Overpayments Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-012 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-009 and 2022-010 detail questioned costs, noncompliance, and weaknesses in internal control related to the regular and pandemic Unemployment Insurance programs regarding fraud issues and overpayments. These findings are integral to and should be read in conjunction with this finding. The U.S. Department of Labor?s (DOL) Unemployment Program Insurance Letter (UIPL) No. 23-20 provides additional guidance to states regarding program integrity for the regular UI program and for the UI programs authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. UIPL 23-20, (4)(b) Program integrity functions for the regular UI programs and CARES Act programs, states, in part: ? The following BPC [Benefit Payment Control] activities are mandatory for states to implement for the regular UI programs on an ongoing basis. States must implement these functions for the Pandemic Emergency Unemployment Compensation (PEUC) and PUA [Pandemic Unemployment Assistance] programs in the same manner as for the regular UI programs. ? National Directory of New Hires Cross-match (UIPL Nos. 13-19 and 19-11). UIPL 13-19 provides detailed, recommended operating procedures for cross-matching with state and national directories of new hire data; ? Quarterly Wage Records Cross-match (20 CFR Section 603.23); and ? Systematic Alien Verification for Entitlement (SAVE) (Section 1137(d) of the Social Security Act (SSA) (42 U.S.C. Section1320b-7). The Department strongly recommends the following additional BPC activities as part of a state?s effective BPC operation for the regular UI programs, PUA and PEUC: ? State Directory of New Hires Cross-match; ? Social Security Administration (SSA) Cross-match; ? Interstate Benefits (IB) Cross-match; ? State Identification Inquiry (SID) and IB8606 enhancements made to the Interstate Connection (ICON) network cross match to prevent concurrent claim filing in multiple states; ? State Information Data Exchange System (SIDES); ? Identity Verification; ? Incarceration Cross-match; and, ? UI Integrity Center?s Integrity Data Hub (IDH) tools including Suspicious Actor Repository (SAR), Suspicious E-Mail Domains, Multi-State Cross-Match (MSCM), Foreign Internet Protocol (IP) Address Detection, and Fraud Alert application. 20 C.F.R. ? 625.14 pertaining to overpayments and disqualifications for fraud states, in part: . . . (h) Fraud Detection and prevention. Provisions in the procedures of each State with respect to detection and prevention of fraudulent overpayments of DUA [Disaster Unemployment Assistance] shall be, as a minimum, commensurate with the procedures adopted by the State with respect to regular compensation and consistent with the Secretary's ?Standard for Fraud and Overpayment Detection,? . . . UIPL No. 2-12, Change 1 provides additional guidance to states regarding program integrity for the regular UI program and amendments made by the Trade Adjustment Assistance Extension Act of 2011 (TAAEA) and states, in part: a. Require states to impose a monetary penalty (an amount not less than 15 percent of the erroneous payment) on claimants whose fraudulent acts resulted in overpayments; b. Prohibit states from providing relief from charges to an employer?s UC [Unemployment Compensation] account when a UC overpayment results from an employer (or an employer?s agent) failing to respond timely or adequately to a request for information by the state agency (i.e., employer or agent at fault), and, at minimum, the employer (or its agent) has established a pattern of failing to respond to such requests; and . . . Ohio Rev. Code ? 4141.35 states, in part: (A) If the director of job and family services finds that any fraudulent misrepresentation has been made by an applicant for or a recipient of benefits with the object of obtaining benefits to which the applicant or recipient was not entitled, and in addition to any other penalty or forfeiture under this chapter, then the director: (1) Shall within four years after the end of the benefit year in which the fraudulent misrepresentation was made reject or cancel such person's entire weekly claim for benefits that was fraudulently claimed, or the person's entire benefit rights if the misrepresentation was in connection with the filing of the claimant's application for determination of benefit rights; (2) Shall by order declare that, for each application for benefit rights and for each weekly claim canceled, such person shall be ineligible for two otherwise valid weekly claims for benefits, claimed within six years subsequent to the discovery of such misrepresentation; (3) By order shall require that the total amount of benefits rejected or canceled under division (A)(1) of this section be repaid to the director before such person may become eligible for further benefits, and shall withhold such unpaid sums from future benefit payments accruing and otherwise payable to such claimant. . . . (B) If the director finds that an applicant for benefits has been credited with a waiting period or paid benefits to which the applicant was not entitled for reasons other than fraudulent misrepresentation, the director shall: (1)(a) Within six months after the determination under which the claimant was credited with that waiting period or paid benefits becomes final pursuant to section 4141.28 of the Revised Code, or within three years after the end of the benefit year in which such benefits were claimed, whichever is later, by order cancel such waiting period and require that such benefits be repaid to the director or be withheld from any benefits to which such applicant is or may become entitled before any additional benefits are paid, provided that the repayment or withholding shall not be required where the overpayment is the result of the director's correcting a prior decision due to a typographical or clerical error in the director's prior decision, or an error in an employer's report under division (G) of section 4141.28 of the Revised Code. . . . Any overpayments made to the individual that have not previously been recovered under an unemployment benefit program of the United States may be recovered in accordance with section 303(g) of the "Social Security Act" and sections 3304(a)(4) and 3306(f) of the "Federal Unemployment Tax Act," 53 Stat. 183 (1939), 26 U.S.C.A. 3301 to 3311. . . . Ohio Rev. Code ? 131.02(A) states, in part: . . . if the amount is not paid within forty-five days after payment is due, the officer, employee, or agent shall certify the amount due to the attorney general, in the form and manner prescribed by the attorney general, and notify the director of budget and management thereof. . . . . UIPL No. 20-21 provides States instructions for assessing fraud penalties and processing overpayment waivers under the CARES Act, as amended. States must establish eligibility criteria for PUA, Federal Pandemic Unemployment Compensation (FPUC), Mixed Earners Unemployment Compensation (MEUC), and PEUC. In general, States are permitted to waive repayment if the overpayment identified was not the claimant's fault and the payment would be contrary to equity and good conscience. In addition, UIPL 20-21 states, in part: Application of a minimum 15 percent monetary penalty. Within the context of the CARES Act, states must apply a minimum 15 percent monetary penalty to an individual?s overpayment when the state determines that such an overpayment was made to an individual due to fraud. Fraud includes instances where an individual knowingly has made, or caused to be made by another, a false statement or representation of a material fact, or knowingly has failed, or caused another to fail, to disclose a material fact. This fraud penalty is applicable to PUA, FPUC, MEUC, PEUC, and the first week of regular UC that is reimbursed in accordance with Section 2105 of the CARES Act? States must apply the fraud monetary penalty for FPUC, MEUC, PEUC, and the first week of regular UC that is reimbursed in accordance with Section 2105 of the CARES Act for all fraud overpayments established on or after the date of publication for this UIPL [May 5, 2021]. It is management?s responsibility to design and implement internal control procedures to ensure compliance with UI program requirements outlined in the federal rules, regulations, and guidance, as well as state laws that govern the program. During state fiscal year (SFY) 2022, the Department disbursed approximately $1.69 billion in UI benefits processed through the Ohio Job Insurance (OJI) and uFACTS systems for the regular Unemployment and pandemic Unemployment programs. The OJI and uFACTS systems automatically generate the cross-match reports as required per UIPL No. 23-20; however, due to the COVID-19 pandemic, the Department had a significant backlog of potential overpayment issues during the audit period causing significant delays in processing time. An issue is created when the system cannot determine the impact of the benefit claim or is created based off of cross-matches. Issues suspected of fraud are forwarded to the Department?s Bureau of Payment Control to be investigated and then adjudicated. An Adjudicator reviews information, known as fact-finding, to make a determination on the benefit claim within 21-days per the Department?s Unemployment Compensation Policy Guide which is based on /a CORE Measure established by the DOL related to timeliness of the nonmonetary determinations for States. Once a determination is made, a Determination Notice or Notice of Overpayment is sent to the claimant. Due to the COVID-19 pandemic, the Department experienced a significant increase in the number of weekly unemployment benefit claims issued through the OJI and uFACTS systems (2,982,414 and 2,260,024, respectively during the year) which had a direct impact on the increase of fraud issues detected. The Department adjudicated 18,314 fraudulent claims for OJI and 293,781 fraudulent claims for uFACTS during SFY 2022. However, the process and/or requirements were not consistently followed, as noted below: ? Of the 25 OJI adjudicated fraud issues selected for testing: - 22 (88%) Notice of Determination/Notice of Overpayments were not issued within 21-days. Days late between the issue determination date and the Notice of Determination/Notice of Overpayment, ranged from 10 to 639 days, for an average of 232 days late. Three of these claims also had payments issued for the claim more than 21 days after the issue determination date. - 12 (48%) were not detected/flagged timely (30 days based on auditor?s judgement) from the benefit week ending date. Days late between the benefit week ending date and the date of issue, ranged from four to 487 days, for an average of 215 days late. - Nine (36%) were not sent the fact-finding questionnaire timely (seven days from the issue determination date based on auditor?s judgement). Days late between the issue determination date and the fact-finding ranged from 20 to 494 days, for an average of 158 days late. ? Of the 25 uFACTS adjudicated fraud issues selected for testing: - 16 (64%) Notice of Determination/Notice of Overpayments were not issued within 21-days. Days late between the issue determination date and the Notice of Determination/Notice of Overpayment ranged from 64 to 379 days, for an average of 196 days late. - 14 (56%) were not detected/flagged timely (30 days based on auditor?s judgement) from the benefit week ending date. Days late between the benefit week ending date and the date of issue ranged from 89 to 578 days, for an average of 334 days late. - Two (8%) were not sent the fact-finding questionnaire timely (seven days from the issue determination date based on auditor?s judgment). Days late between the issue determination date and the fact-finding were three and eight days, for an average of six days late. - Two (8%) did not have a stop payment completed timely (seven days from the issue determination date based on auditor's judgment). Days late between the issue determination date and the last paid claim were 180 and 366 days, for an average of 273 days late. Once an issue has been adjudicated, the Department?s Bureau of Payment Control is responsible for determining the claimant?s benefit overpayment and issues a Notice of Overpayment. Overpayments are benefits paid to individuals who are not legally entitled to receive these benefits. Losses through embezzlement or by theft, other than through the benefit payment process, are not counted as overpayments. Overpayments are reported to the DOL in the quarter and/or month in which they occur, which is once adjudication is complete. A fraud overpayment occurs when the material facts related to a determination or payment of a claim are found during the adjudication process to be knowingly misrepresented or concealed (i.e., willful misrepresentation) by the claimant in order to obtain benefits to which the individual is not legally entitled. A non-fraud overpayment occurs when the state agency determines, through adjudication, the overpayment is not due to willful misrepresentations. Non-fraud overpayments result from reversals, state agency errors, employer errors, and claimant errors. The Department reported approximately $598.2 million in fraudulent outstanding overpayments and $2.17 billion in non-fraudulent outstanding overpayments processed through OJI and uFACTS to the DOL as of June 30, 2022. If overpayments are based on fraud, the OJI and uFACTS systems are to automatically include a 15% penalty, as required by UPIL No. 20-21. The Department then notifies the claimant of the monetary penalties, attempts to collect the penalties, and deposits the penalties collected into the State?s Unemployment Trust Fund. Although the Department appropriately assessed a 15% monetary penalty for PUA and FPUC claims processed through uFACTS during SFY 2022, the Department did not assess the 15% monetary penalty for any FPUC overpayments processed through the OJI system. The Department attempts to collect overpayments by sending an appealable overpayment determination to the claimant. If repayment is not received within 45 days after the payment is due, the amount is certified to the Ohio Attorney General for collection pursuant to Ohio Rev. Code ?131.02. The federal government gave discretion to states to waive the need for a repayment of pandemic funding related to non-fraud overpayments, but claimants must request the waiver from the Department to avoid repayment. During SFY 2022, the Department processed 111,697 overpayment waiver requests and waived repayment of approximately $172.6 million based on approved claimant requests or other waivers. During SFY 2022, the Department certified the fraud and non-fraud overpayments processed through OJI to the Ohio Attorney General for collection; however, the Department only certified 1,000 overpayments processed through uFACTS, totaling $59,526, to the Ohio Attorney General for collection based on its manual process. The Department determined the manual process was too labor intensive and stopped certifying uFACTS overpayments to the Ohio Attorney General for collection until an automated process was developed and implemented in October 2022, after the end of the audit period. Additionally, the Department has flagged approximately $1.08 billion in potential overpayments for the regular Unemployment and the pandemic Unemployment programs as of June 30, 2022. Despite being flagged as potential overpayments, a final determination as to whether these are overpayments and/or fraudulent cannot be made until these claims are fully adjudicated. Without proper controls to ensure the timely identification of fraud issues and the adjudication of fraudulent and non-fraudulent issues and overpayment determinations (if applicable), the Department increases the risk of inaccurate or incomplete financial and/or programmatic activity being reported to the federal grantor agency. Furthermore, the Department is limiting the amount of funding available for program activities by not certifying and pursuing collection of the Unemployment benefit overpayments for the pandemic Unemployment programs, as well as by not properly assessing the monetary penalty to fraudulent FPUC claims processed through OJI. Based on discussions with management, these errors are due to the amount of time and effort necessary to adjudicate fraud and process the high volume of backlog of claims and potential overpayments, time necessary to implement system improvements, and oversight. We recommend the Department continue to evaluate, strengthen, and monitor internal controls and procedures related to UI fraud and overpayments to ensure they are working as management intended, including, but not limited to: ? Periodic management reviews of the cross-match documentation to ensure the matches are being performed timely and as intended. If the information necessary to complete the cross-matches is obtained from an outside party, the Department should work with the entity to ensure the information is obtained timely. Additionally, the Department should continue to prioritize issues based on the aging of issues created by the cross-matches, monitor the issue backlog, ensure issues are being addressed timely, and the Notices of Determination are issued in a timely manner. ? Periodic management reviews over the timing of the fact-finding questionnaires generated by the OJI and/or uFACTS systems once an issue has been created. ? Periodic management reviews over the certification of OJI and uFACTS overpayments to the Ohio Attorney General and subsequent collections. ? System enhancements within OJI to ensure the monetary fraud overpayment penalty amounts are being applied to each applicable overpayment. Management should monitor the system enhancements to ensure they are being captured, properly applied, and appropriately collected.
UNEMPLOYMENT INSURANCE ? DEATH FILE AND INCARCERATION CROSS-MATCHES Finding Number: 2022-009 State Agency Number: JFS-01 Assistance Listing Number and Title: 17.225 ? Unemployment Insurance 17.225 COVID-19 ? Unemployment Insurance Federal Award Identification Number / Year: UI-32619-19-55-A-39 / 2019 UI-34078-20-55-A-39 / 2020 UI-35668-21-55-A-39 / 2021 UI-37243-22-55-A-39 / 2022 Federal Agency: Department of Labor Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Costs Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-011 QUESTIONED COSTS AND SIGNIFICANT DEFICIENCY NOTE: Finding numbers 2022-010 and 2022-012 detail questioned costs, noncompliance, and weaknesses in internal control related to the regular and pandemic Unemployment Insurance programs regarding fraud issues and overpayments. These findings are integral to and should be read in conjunction with this finding. 2 C.F.R. ? 2900.4 gives regulatory effect to the Department of Labor for 2 C.F.R. ? 200.1 which states, in part: . . . Improper Payment means: (1) Any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements. (i) Incorrect amounts are overpayments or underpayments that are made to eligible recipients (including inappropriate denials of payment or service, any payment that does not account for credit for applicable discounts, payments that are for an incorrect amount, and duplicate payments). An improper payment also includes any payment that was made to an ineligible recipient or for an ineligible good or service, or payments for goods or services not received (except for such payments authorized by law). ? The Department of Labor?s Unemployment Insurance Program Letter (UIPL) No. 23-20 provides additional guidance to states regarding program integrity for the regular UI program and for the UI programs authorized by the CARES Act, enacted on March 27, 2020. UIPL 23-20, (4)(b) Program integrity functions for the regular UI programs and CARES Act programs states, in part: . . . The following BPC [Benefit Payment Control] activities are mandatory for states to implement for the regular UI programs on an ongoing basis. States must implement these functions for the PEUC [Pandemic Emergency Unemployment Compensation] and PUA [Pandemic Unemployment Assistance] programs in the same manner as for the regular UI programs. ? National Directory of New Hires Cross-match (UIPL Nos. 13-19 and 19-11). UIPL 13-19 provides detailed, recommended operating procedures for crossmatching with state and national directories of new hire data; ? Quarterly Wage Records Cross-match (20 CFR ? 603.23); and ? Systematic Alien Verification for Entitlement (SAVE) (Section 1137(d) of the Social Security Act (SSA) (42 U.S.C. ?1320b-7). The Department [of Labor] strongly recommends the following additional BPC activities as part of a state?s effective BPC operation for the regular UI programs, PUA, and PEUC: ? State Directory of New Hires Cross-match; ? Social Security Administration (SSA) Cross-match; ? Interstate Benefits (IB) Cross-match; ? State Identification Inquiry (SID) and IB8606 enhancements made to the Interstate Connection (ICON) network cross match to prevent concurrent claim filing in multiple states; ? State Information Data Exchange System (SIDES) (Training and Employment Notice No. 12-16); ? Identity Verification; ? Incarceration Cross-match; and ? UI Integrity Center?s Integrity Data Hub (IDH) tools including the Suspicious Actor Repository (SAR), Suspicious E-Mail Domains, Multi-State Cross-Match (MSCM), Foreign Internet Protocol (IP) Address Detection, and Fraud Alert application. It is management?s responsibility to reasonably ensure control procedures are in place and operating effectively to prevent benefits from being paid to individuals who do not meet the eligibility requirements for the UI program. During state fiscal year (SFY) 2022, the Department disbursed more than $1.69 billion in Unemployment benefits. Approximately $476.7 million of the total disbursed related to pandemic Unemployment benefit payments issued through the uFACTS system and $1.21 billion of the total disbursed related to regular Unemployment benefit payments issued through the Ohio Job Insurance (OJI) system. The Department implemented the BPC cross-matches for the pandemic Unemployment benefit payments in uFACTS, as required by UIPL 23-30, in February 2021 for the Innovate Ohio matches (e.g, Death, Inmate, Nursing Home, and State Employee) and May 2021 for the SSA cross-matches. In addition, the Department implemented the cross-matches for SSA and Incarceration in OJI in May 2021. In response to the COVID-19 pandemic, the Department implemented Lexis Nexis (uFACTS) and Experian (OJI) ID verification tools in late March/early April 2021; both of which factor in death when performing ID verification protocols. The Department receives death data from the Ohio Department of Health and incarceration data from the Ohio Department of Rehabilitation and Correction on a weekly basis. Cross-matches with this data are performed using the Department?s online dashboard based on default settings. The results of these cross-matches are displayed on the dashboard, which the Department?s Benefit Payment Control section staff are tasked with reviewing. However, a point in time results file that can be saved or archived for future review is not generated. Information contained in the dashboard is dynamic and is updated constantly as new data is received. No documentation was available to evidence a review process or any actions taken as a result of the dashboard cross-matches. An analysis of Unemployment benefits paid during SFY 2022 compared to data files received from the Ohio Department of Health and the Ohio Department of Rehabilitation and Correction identified $2,169,454 in benefits paid to individuals who were either deceased or incarcerated prior to the benefit week ending date associated with the benefit payments, as detailed below. Deceased Prior to Benefit Week Ending Date: ? 258 weekly claims transactions relating to 47 individual claimants, totaling $75,313 from the uFACTS system. ? 114 weekly claims transactions relating to 27 individual claimants, totaling $38,924 from the OJI system. Incarcerated Prior to Benefit Week Ending Date: The incarceration file utilized in this analysis was for the period of 3/1/2020 through 2/28/21; we were unable to obtain an incarceration file for SFY 2022 containing inmate social security numbers, a data element critical to the performance of our analysis. Therefore, the file utilized did not include individuals incarcerated, or take into account those who received early release after 2/28/21. Our analysis compared the OJI and uFACTS claims paid during SFY 2022 to the incarceration file. This comparison identified Unemployment benefits paid to individuals during SFY 2022 where the benefit week ending date was after their incarceration date and before their expected release date. These results did not exclude partial eligibility where the date of death or incarceration occurred in the benefit week. ? 5,717 weekly claims transactions relating to 303 individual claimants, totaling $1,992,919 from the uFACTS system. ? 239 weekly claims transactions relating to 16 individual claimants, totaling $62,298 from the OJI system. As such, we will question all benefit payments made to individuals who were either deceased or incarcerated prior to the benefit week ending date, totaling $2,169,454. Anomalies in the date and name fields contained in the OJI and uFACTS files provided by the Department, the social security number field being limited to the last four digits in the death file provided by the Ohio Department of Health, the unavailability of an updated incarceration file from the Ohio Department of Rehabilitation and Correction, and variables in the date fields contained in the incarceration file utilized limited our ability to place a high level of reliance on the completeness and accuracy of the above mentioned results. However, these results indicate the controls included in the system are not working effectively, resulting in unallowable payments to ineligible recipients. Without effective internal control procedures and cross-matching against reliable death records or incarcerated data prior to payment, there is an increased risk that inaccurate or unallowable benefit payments will be made. Overpayments to ineligible claimants may subject the Department to penalties or sanctions from the federal grantor agency which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. We recommend the Department evaluate and strengthen current cross-matching internal control procedures, including those related to deceased and incarcerated individuals, to help identify potential ineligible individuals prior to making payments. These internal controls should formally define the frequency of review, the expected output/results file, and a process to investigate, document, track, and maintain documentation related to any actions taken as a result of the cross-match. Working with the Ohio Department of Health and the Ohio Department of Rehabilitation and Correction will be required to obtain reliable death and incarceration records. We further recommend the Department perform procedures to identify improper payments already made to deceased and incarcerated individuals and seek recovery, reimbursement, or offset future benefits, where necessary.
UNEMPLOYMENT INSURANCE ? PANDEMIC UNEMPLOYMENT ASSISTANCE AND FEDERAL PANDEMIC UNEMPLOYMENT COMPENSATION Finding Number: 2022-010 State Agency Number: JFS-02 Assistance Listing Number and Title: 17.225 COVID-19 ? Unemployment Insurance Federal Award Identification Number / Year: UI-32619-19-55-A-39 / 2019 UI-34078-20-55-A-39 / 2020 UI-35668-21-55-A-39 / 2021 UI-37243-22-55-A-39 / 2022 Federal Agency: Department of Labor Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Costs Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-009 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-009 and 2022-012 detail questioned costs, noncompliance, and weaknesses in internal control related to the regular and pandemic Unemployment Insurance programs regarding fraud issues and overpayments. These findings are integral to and should be read in conjunction with this finding. 15 U.S.C. ? 9021 pertaining to PUA, states, in part: (a) Definitions (3) Covered Individual The term ?covered individual? ? (A) means an individual who ? (i) is not eligible for regular compensation or extended benefits under State or Federal law or pandemic emergency unemployment compensation under section 9025 of this title, including an individual who has exhausted all rights to regular unemployment or extended benefits under State or Federal law or pandemic emergency unemployment compensation under section 9025 of this title; ? . . . (c) Applicability (1) In general Except as provided in paragraph (2), the assistance authorized under subsection (b) shall be available to a covered individual? (A) for weeks of unemployment, partial unemployment, or inability to work caused by COVID?19 ? (i) beginning on or after January 27, 2020; and (ii) ending on or before September 6, 2021; and (B) subject to subparagraph (A)(ii), as long as the covered individual?s unemployment, partial unemployment, or inability to work caused by COVID?19 continues. (2) Limitation on duration of assistance The total number of weeks for which a covered individual may receive assistance under this section shall not exceed 79 weeks and such total shall include any week for which the covered individual received regular compensation or extended benefits under any Federal or State law, except that if after March 27, 2020, the duration of extended benefits is extended, the 79-week period described in this paragraph shall be extended by the number of weeks that is equal to the number of weeks by which the extended benefits were extended. . . . (d) Amount of Assistance . . . (A) (i) the weekly benefit amount authorized under the unemployment compensation law of the State where the covered individual was employed, except that the amount may not be less than the minimum weekly benefit amount described in section 625.6 of title 20, Code of Federal Regulations, or any successor thereto; and (ii) ending on or before September 6, 2021; and (ii) the amount of Federal Pandemic Unemployment Compensation [FPUC] under section 9023 of this title; ? . . . (h) Relationship between pandemic unemployment assistance and disaster unemployment assistance [DUA] Except otherwise provided in this section or to the extent there is a conflict between this section and section?625 of title 20, Code of Federal Regulations, such section?625 shall apply to this section as if: (1) the term ?COVID?19 public health emergency? were substituted for the term ?major disaster? each place it appears in such section?625; and (2) the term ?pandemic? were substituted for the term ?disaster? each place it appears in such section? 625. . . . 15 U.S.C. ? 9023(3) pertaining to FPUC states, in part: (A) In general The amount specified in this paragraph is the following amount: (i) For weeks of unemployment beginning after the date on which an agreement is entered into under this section and ending on or before July 31, 2020, $600. (ii) For weeks of unemployment beginning after December 26, 2020 (or, if later, the date on which such agreement is entered into), and ending on or before September 6, 2021, $300. . . . 20 C.F.R. ? 625.6, pertaining to the weekly amount states, in part: . . . (e) . . . An immediate determination of a weekly amount shall also be made where, in conjunction with the filing of an initial application for DUA, the individual submits documentation substantiating employment or self-employment and wages earned or paid for such employment or self-employment, or, in the absence of documentation, where any State agency records of employment or self-employment and wages earned or paid for such employment or self-employment, justify the determination of a weekly amount. . . . (1) In the case of a weekly amount determined in accordance with paragraph (e) of this section, based only on the individual's statement of earnings, the individual shall furnish documentation to substantiate the employment or self-employment or wages earned from or paid for such employment or self-employment or documentation to support that the individual was to commence employment or self-employment on or after the date the major disaster began. In either case, documentation shall be submitted within 21 calendar days of the filing of the initial application for DUA. (2) Any individual who fails to submit documentation to substantiate employment or self-employment or the planned commencement of employment or self-employment in accordance with paragraph (e)(1) of this section, shall be determined ineligible for the payment of DUA for any week of unemployment due to the disaster. Any weeks for which DUA was already paid on the application prior to the date of the determination of ineligibility under this paragraph (e)(2) are overpaid and a determination shall be issued in accordance with ? 625.14(a). In addition, the State agency shall consider whether the individual is subject to a disqualification for fraud in accordance with the provisions set forth in ? 625.14(i). . . . The federal government established rules, regulations, and requirements related to eligibility, benefit amounts and timing, monitoring responsibilities, etc. regarding the expanded Unemployment benefits related to the pandemic. It is management?s responsibility to implement controls, processes, and procedures to provide reasonable assurance over the reliability of financial reporting, effectiveness and efficiency of operations, and compliance with these rules, regulations, and requirements. The COVID-19 Pandemic presented the Department with many challenges and obstacles including a sharp increase in the volume of unemployment claims, the expansion of regular unemployment benefits by the federal government, and the lack of manpower and technology resources. The Department?s legacy unemployment system, Ohio Job Insurance (OJI), has been in place since 2004. The Department indicated that, due to OJI?s age and functionality, it was unable to handle the increased volume of claimants brought on by the pandemic. Therefore, the Department contracted with a service organization for processing of pandemic unemployment benefits and maintaining key functions of the benefit claims processing, which were customized to fit Ohio?s needs (effective May 14, 2020). This outside system, the Unemployment Framework for Automated Claim & Tax Services (uFACTS) system, was used for certain pandemic benefits only and maintained key functions of the benefit claims processing for this activity. Pandemic Unemployment benefits for new claims ended as of September 2021; however, the uFACTS system remains operational so the Department can continue to process the backlog of claims filed before the deadline and adjudicate pending claims flagged for further review. During state fiscal year 2022, the Department disbursed more than $1.69 billion in Unemployment benefits from both OJI and uFACTS. Approximately $476.7 million and $323.8 million related to PUA and FPUC benefits, respectively. The Department also reported to the U.S. Department of Labor outstanding Unemployment Insurance overpayments totaling $2.77 billion as of June 30, 2022. Of these total overpayments, $598.2 million was identified as fraud and $2.17 billion as non-fraud relating to regular unemployment and federal pandemic Unemployment benefits. Approximately $955 million (44%) of the non-fraud overpayments and $221.5 million (37%) of the fraud overpayments were processed through uFACTS. Eligibility for PUA and FPUC was determined within OJI or uFACTS based upon requirements outlined in state and/or federal laws. PUA provided up to a max of 79 weeks of benefits to many who historically have not qualified for unemployment benefits, such as self-employed workers, 1099 tax filers, part-time workers, and those who lack sufficient work history. FPUC provided additional benefits of $600 and/or $300 per week to individuals that qualified for regular unemployment or PUA benefits. Weekly, claimants confirmed their unemployment status and completed the COVID-19 self-attestation questionnaire within uFACTS or OJI. If the claimant?s benefit payment was flagged, an adjudicator performed an additional review and requested fact-finding information for either monetary or nonmonetary issues. The claimant continued to receive weekly benefit payments until the adjudicator investigated the issue and confirmed the claimant?s ineligible status. If an issue was suspected of fraud, the issue was routed to the Department?s Benefit Payment Control section to be investigated, adjudicated and, if applicable, an overpayment flag was created in the related system. The Department?s policy, which is based on U.S. Department of Labor guidance, is to adjudicate possible fraud cases within 21 days or 90 days, depending on the circumstances of the case. Although the Department implemented several additional controls during state fiscal year 2022 related to the pandemic unemployment benefits, the timing of these changes and/or application of the controls did not prevent or detect the following noncompliance errors, resulting in questioned costs totaling $86,076 ($55,836 for PUA and $30,240 for FPUC): ? For one of 60 (1.7%) regular Unemployment benefit payments selected for testing, the claimant was paid FPUC benefits of $300 a week for several weeks of benefits which were already paid in state fiscal year 2021. As a result, we will question all duplicate FPUC payments made to this claimant during the audit period, totaling $4,800. ? For eight of nine (88.9%) regular Unemployment benefit claims identified in an OJI system data match as potentially exceeding the maximum allowable amount per week, the claimants were paid $300 in FPUC benefits twice during the same benefit week. As a result, we will question costs for all FPUC payments over the allowable amount to these claimants during the audit period, totaling $17,640. ? Two of two (100%) PUA claims identified in a uFACTS system data match exceeded the maximum allowable number of weeks (79): one by four weeks and the other by two weeks. As a result, we will question the PUA payments exceeding the maximum allowable number of weeks, totaling $1,656. ? For eight of 60 (13.3%) PUA / FPUC payments selected for testing, the claimant was not eligible to receive benefits for the weeks claimed, was overpaid, or was underpaid, as follows: ? Two claimants were paid weekly benefit amounts exceeding the calculated weekly benefit amount. The Department determined one claimant was eligible for weekly benefits of $480 and the other $582; however, neither claimant's employment verification showed monetary eligibility for more than the minimum weekly benefit amount of $189. As a result, we will question all PUA payments made to these claimants exceeding the minimum weekly benefit amount of $189 during the audit period, totaling $31,650. ? One claimant quit their job for a non-qualifying COVID-19 separation reason and was ineligible for benefits. The regular Unemployment claim was appropriately denied in OJI, but the Department later approved the same separation as a PUA / FPUC claim. The Department determined the claim to be fraudulent in May 2022. As a result, we will question all PUA and FPUC payments made to this claimant during the audit period, totaling $7,182 and $7,800, respectively. ? One claimant was employed full-time the entire claim period and therefore ineligible for benefits. The Department appropriately denied the regular Unemployment claim in OJI but later approved the same separation as a PUA claim. As a result, we will question all PUA payments made to this claimant during the audit period, totaling $11,568. ? For two claims, the Department requested the claimant provide employment verification and the claimant did not respond in 90 days, as required by the Consolidated Appropriations Act. The claimant continued to file Unemployment claims after the 90-day deadline and the Department continued to pay benefits to the claimants until the adjudication date, occurring 28 days after the due date for one claim and 79 days for the other. As a result, we will question all PUA payments made to these claimants during the audit period between the due date for employment verification and the adjudication date, totaling $2,457. ? One claimant was improperly paid PUA benefits for weeks they were eligible for regular Unemployment. As a result, we will question all PUA benefit payments made to this claimant during the audit period for the weeks they were eligible for regular Unemployment, totaling $1,323. ? One claimant was paid a weekly benefit amount less than the calculated weekly benefit amount. The Department determined the claimant was eligible for weekly PUA benefits of $322; however, the employment verification used in the monetary determination showed the claimant was entitled to weekly benefits of $403. As a result, the claimant was underpaid a total of $2,628 PUA benefits during the audit period. Without effective internal controls for the eligibility determination and benefit payment processes, there is an increased risk benefit payments will be inaccurate or unallowable. The risk is increased if the systems contain significant flaws or eligibility redeterminations are not made timely or accurately. Overpayments to ineligible claimants may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, these errors were due to oversight and the significant workload increase because of the impact the pandemic had on the program. We recommend Department management: ? Evaluate and strengthen current internal control procedures over the Unemployment Insurance program to assure claimants are eligible and receive the correct weekly benefits. This should include evaluating the cause of the errors identified above and updating controls as necessary. ? Periodically monitor the established controls to determine if they are working effectively and as intended. ? Perform periodic reviews of the claimant files to reasonably ensure the information is properly maintained and accurately entered into the related systems. ? Evaluate overpayments and/or payments to ineligible claimants and offset future benefits or seek reimbursement, where necessary.
WIOA CLUSTER AND FOSTER CARE ? FEDERAL REPORTING Finding Number: 2022-014 State Agency Number: JFS-06 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.568 ? Foster Care Title IV-E Federal Award Identification Number / Year: AA36339DQ0 / 2021 (WIOA Cluster) 2101OHFOST / 2021 (Foster Care) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ? 75.302 contains the Department of Health and Human Services uniform administrative requirements for grants to state and local governments relating to financial administration and standards for financial management systems. Specifically, 45 C.F.R. ? 75.302 states, in part: (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds. In addition, the state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. (b) The financial management system of each non-Federal entity must provide for the following (see also Sections 75.361, .362, .363, .364, and .365): . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 75.341 and .342? (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . . The Department of Labor implemented similar uniform administrative requirements in 29 C.F.R. ? 97.20 which states, in part: (a) A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to - (1) Permit preparation of reports required by this part and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) The financial management systems of other grantees and sub grantees must meet the following standards: (1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. (2) Accounting records. Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. . . . It is management?s responsibility to implement control policies and procedures to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with program requirements. It is imperative that management be able to provide the underlying data and related program documentation required to prepare and support these reports. The Department?s Bureau of Grants Management and Federal Reporting Services (the Bureau) is responsible for the preparation of various federal financial expenditure reports, including the quarterly Foster Care CB-496 and quarterly WIOA Cluster ETA-9130 reports. The Bureau runs reports from various computer systems, transfers this information to the applicable federal reports, and submits them for a two-level review process prior to submitting them to the federal grantor agency. However, the Bureau?s review of federal reports was not adequate and/or operating effectively. As a result, the following errors were identified in the reports tested during state fiscal year 2022: ? For one of two (50%) quarterly Foster Care CB-496 reports selected for testing (quarter ending September 30, 2021): o The Bureau overstated Line 10a - Current Quarter Claims, Title IV-E Foster Care Candidate Administrative Costs - Case Planning and Management by $2,183 and the federal share for the line by $1,091. The Bureau included an amount that was already properly reported in another line. o The Bureau overstated Line 16a - Demonstration Project Costs by $63,500 and the federal share for the line by $31,750. The Bureau improperly reported the total claim amount as the federal share amount. o The Bureau incorrectly reported a decreasing prior quarter adjustment in Line 5 ? In-Placement Administrative Costs ? Case Planning and Management instead of Line 6 ? In-Placement Administrative Costs ? Eligibility Determinations. This caused line 5 to be understated by $171 and the federal share for the line to be understated by $85. As a result, Line 6 was overstated by the same amounts. ? For one of 15 (6.7%) quarterly WIOA Cluster ETA-9130 reports selected for testing (Statewide Rapid Response for quarter ending March 31, 2022): o The Bureau reported Line 10g - Federal Share of Unliquidated Obligations as $59,668; however, supporting documentation showed the amount to be $44,755, for an overstatement of $14,913. A lack of adequate internal controls over federal reporting increases the risk that reports submitted to the federal grantor agency are inaccurate. If the underlying data for the submitted reports cannot be readily verified, the Department and the federal government may not be reasonably assured the information is accurate and complete. Reporting inaccurate or incomplete information could subject the Department to federal sanctions, limiting the amount of funding for program activities. Based on discussions with management, these errors were due to oversight. We recommend the Department evaluate current procedures and implement additional policies and procedures as necessary to provide reasonable assurance the data being reported for all federal programs is reasonable and accurate and agrees to supporting documentation. The Department should ensure all reports (and any necessary corrections to reports) are reviewed and approved by the appropriate level of management.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
WIOA CLUSTER AND FOSTER CARE ? FEDERAL REPORTING Finding Number: 2022-014 State Agency Number: JFS-06 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.568 ? Foster Care Title IV-E Federal Award Identification Number / Year: AA36339DQ0 / 2021 (WIOA Cluster) 2101OHFOST / 2021 (Foster Care) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ? 75.302 contains the Department of Health and Human Services uniform administrative requirements for grants to state and local governments relating to financial administration and standards for financial management systems. Specifically, 45 C.F.R. ? 75.302 states, in part: (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds. In addition, the state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. (b) The financial management system of each non-Federal entity must provide for the following (see also Sections 75.361, .362, .363, .364, and .365): . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 75.341 and .342? (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . . The Department of Labor implemented similar uniform administrative requirements in 29 C.F.R. ? 97.20 which states, in part: (a) A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to - (1) Permit preparation of reports required by this part and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) The financial management systems of other grantees and sub grantees must meet the following standards: (1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. (2) Accounting records. Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. . . . It is management?s responsibility to implement control policies and procedures to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with program requirements. It is imperative that management be able to provide the underlying data and related program documentation required to prepare and support these reports. The Department?s Bureau of Grants Management and Federal Reporting Services (the Bureau) is responsible for the preparation of various federal financial expenditure reports, including the quarterly Foster Care CB-496 and quarterly WIOA Cluster ETA-9130 reports. The Bureau runs reports from various computer systems, transfers this information to the applicable federal reports, and submits them for a two-level review process prior to submitting them to the federal grantor agency. However, the Bureau?s review of federal reports was not adequate and/or operating effectively. As a result, the following errors were identified in the reports tested during state fiscal year 2022: ? For one of two (50%) quarterly Foster Care CB-496 reports selected for testing (quarter ending September 30, 2021): o The Bureau overstated Line 10a - Current Quarter Claims, Title IV-E Foster Care Candidate Administrative Costs - Case Planning and Management by $2,183 and the federal share for the line by $1,091. The Bureau included an amount that was already properly reported in another line. o The Bureau overstated Line 16a - Demonstration Project Costs by $63,500 and the federal share for the line by $31,750. The Bureau improperly reported the total claim amount as the federal share amount. o The Bureau incorrectly reported a decreasing prior quarter adjustment in Line 5 ? In-Placement Administrative Costs ? Case Planning and Management instead of Line 6 ? In-Placement Administrative Costs ? Eligibility Determinations. This caused line 5 to be understated by $171 and the federal share for the line to be understated by $85. As a result, Line 6 was overstated by the same amounts. ? For one of 15 (6.7%) quarterly WIOA Cluster ETA-9130 reports selected for testing (Statewide Rapid Response for quarter ending March 31, 2022): o The Bureau reported Line 10g - Federal Share of Unliquidated Obligations as $59,668; however, supporting documentation showed the amount to be $44,755, for an overstatement of $14,913. A lack of adequate internal controls over federal reporting increases the risk that reports submitted to the federal grantor agency are inaccurate. If the underlying data for the submitted reports cannot be readily verified, the Department and the federal government may not be reasonably assured the information is accurate and complete. Reporting inaccurate or incomplete information could subject the Department to federal sanctions, limiting the amount of funding for program activities. Based on discussions with management, these errors were due to oversight. We recommend the Department evaluate current procedures and implement additional policies and procedures as necessary to provide reasonable assurance the data being reported for all federal programs is reasonable and accurate and agrees to supporting documentation. The Department should ensure all reports (and any necessary corrections to reports) are reviewed and approved by the appropriate level of management.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
WIOA CLUSTER AND FOSTER CARE ? FEDERAL REPORTING Finding Number: 2022-014 State Agency Number: JFS-06 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.568 ? Foster Care Title IV-E Federal Award Identification Number / Year: AA36339DQ0 / 2021 (WIOA Cluster) 2101OHFOST / 2021 (Foster Care) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ? 75.302 contains the Department of Health and Human Services uniform administrative requirements for grants to state and local governments relating to financial administration and standards for financial management systems. Specifically, 45 C.F.R. ? 75.302 states, in part: (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds. In addition, the state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. (b) The financial management system of each non-Federal entity must provide for the following (see also Sections 75.361, .362, .363, .364, and .365): . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 75.341 and .342? (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . . The Department of Labor implemented similar uniform administrative requirements in 29 C.F.R. ? 97.20 which states, in part: (a) A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to - (1) Permit preparation of reports required by this part and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) The financial management systems of other grantees and sub grantees must meet the following standards: (1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. (2) Accounting records. Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. . . . It is management?s responsibility to implement control policies and procedures to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with program requirements. It is imperative that management be able to provide the underlying data and related program documentation required to prepare and support these reports. The Department?s Bureau of Grants Management and Federal Reporting Services (the Bureau) is responsible for the preparation of various federal financial expenditure reports, including the quarterly Foster Care CB-496 and quarterly WIOA Cluster ETA-9130 reports. The Bureau runs reports from various computer systems, transfers this information to the applicable federal reports, and submits them for a two-level review process prior to submitting them to the federal grantor agency. However, the Bureau?s review of federal reports was not adequate and/or operating effectively. As a result, the following errors were identified in the reports tested during state fiscal year 2022: ? For one of two (50%) quarterly Foster Care CB-496 reports selected for testing (quarter ending September 30, 2021): o The Bureau overstated Line 10a - Current Quarter Claims, Title IV-E Foster Care Candidate Administrative Costs - Case Planning and Management by $2,183 and the federal share for the line by $1,091. The Bureau included an amount that was already properly reported in another line. o The Bureau overstated Line 16a - Demonstration Project Costs by $63,500 and the federal share for the line by $31,750. The Bureau improperly reported the total claim amount as the federal share amount. o The Bureau incorrectly reported a decreasing prior quarter adjustment in Line 5 ? In-Placement Administrative Costs ? Case Planning and Management instead of Line 6 ? In-Placement Administrative Costs ? Eligibility Determinations. This caused line 5 to be understated by $171 and the federal share for the line to be understated by $85. As a result, Line 6 was overstated by the same amounts. ? For one of 15 (6.7%) quarterly WIOA Cluster ETA-9130 reports selected for testing (Statewide Rapid Response for quarter ending March 31, 2022): o The Bureau reported Line 10g - Federal Share of Unliquidated Obligations as $59,668; however, supporting documentation showed the amount to be $44,755, for an overstatement of $14,913. A lack of adequate internal controls over federal reporting increases the risk that reports submitted to the federal grantor agency are inaccurate. If the underlying data for the submitted reports cannot be readily verified, the Department and the federal government may not be reasonably assured the information is accurate and complete. Reporting inaccurate or incomplete information could subject the Department to federal sanctions, limiting the amount of funding for program activities. Based on discussions with management, these errors were due to oversight. We recommend the Department evaluate current procedures and implement additional policies and procedures as necessary to provide reasonable assurance the data being reported for all federal programs is reasonable and accurate and agrees to supporting documentation. The Department should ensure all reports (and any necessary corrections to reports) are reviewed and approved by the appropriate level of management.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? SUBRECIPIENT MONITORING Finding Number: 2022-006 State Agency Number: EDU-01 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 Federal Agency: Department of Education Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 200.332 outlines pass-through entity responsibilities and states, in part, that all pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ? (2) 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 written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. . . . The Department's Office of Federal Programs is responsible for monitoring subrecipients of the Education Stabilization Fund (ESF), including the subprogram, Elementary and Secondary School Emergency Relief (ESSER) Fund. The Office of Federal Programs monitors subrecipient compliance with ESSER program requirements through self-surveys, desk reviews, or on-site reviews based on various risk factors. If noncompliance is identified, the Department requests and reviews the corrective action plan created by the subrecipient. The Office of Federal Programs then performs a follow-up desk review to ensure the subrecipient successfully implemented their corrective action plan. During state fiscal year (SFY) 2022, the Office of Federal Programs identified four noncompliance issues for the ESF ? ESSER program that required corrective action plans. However, for one of two (50%) noncompliance issues selected for testing, the Office of Federal Programs did not obtain a corrective action plan, nor did they perform a follow-up desk review to ensure a corrective action plan was implemented timely and properly. Failure to follow up with subrecipients on noncompliance issues identified through the monitoring process could lead to further noncompliance with federal program regulations, as well as improper use of funding. Based on discussions with management, when the Office of Federal Programs separated the ESSER compliance monitoring out of the Department?s consolidated grants monitoring system into its own individual process at the beginning of SFY 2022, this noncompliance issue which was identified and included in the previous system was missed due to oversight. The Department?s Office of Federal Programs should strengthen existing processes and procedures to ensure that all subrecipients with detected noncompliance issues are properly accounted for in the monitoring records/system. The Department should take measures to ensure each subrecipient with noncompliance issues properly submits a corrective action plan. The Department should then perform a follow-up review to verify the subrecipient has taken timely and appropriate action to address the noncompliance issues identified.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? ANNUAL REPORT Finding Number: 2022-008 State Agency Number: EDU-03 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 S425D210035 / 2021 S425U210035 / 2021 Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS The U.S. Department of Education?s (USED) Office of Elementary and Secondary Education?s website states: All grantees are required to report on Elementary and Secondary School Emergency Relief (ESSER) funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA Act), and the American Rescue Plan (ARP Act). Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Part B(9) of the Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund) between the Department and USED states, in part: ?The Secretary may require additional reporting in the future, which may include: the methodology LEAs [Local Education Agencies] will use to provide services or assistance to students and staff in both public and non-public schools, the uses of funds by the LEAs or other entities and demonstration of their compliance with Section 18003(d) of the CARES Act ... Further, the 2022 U.S. Office of Management and Budget?s Compliance Supplement states, in part: ESSER. . .grantees must submit an annual performance report (OMB No. 1810-0749?) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Per guidance received from USED, the Department was required to submit the annual performance report for the Education Stabilization Fund?s ESSER I, II, and III subprograms between May 31 ? July 1, 2022. The Department submitted the report on July 1, 2022; however, USED noted several errors in the Department?s report and allowed the Department to submit an amended report between August 22 ? September 9, 2022. The Department submitted the amended version on September 8, 2022. Both the original and amended versions of the annual performance report covered the period of October 1, 2020 through June 30, 2021 for ESSER I and the period of July 1, 2020 through June 30, 2021 for ESSER II and ARP ESSER (ESSER III). The Department worked with the Management Council of the Ohio Education Computer Network to create a data portal for each school district to report their ESSER activity. The Department then used this data to compile the annual performance report and upload it into the Data Collection Tool, the application USED established to collect the data. However, while the Department had control procedures in place, they were not sufficient to ensure the completeness and accuracy of the information included in the annual report. In addition, the Department was unable to provide documentation to support the amounts reported. As a result, the total expenditures reported for 23 of 25 school districts selected for testing were not calculated/reported correctly when compared to amounts from the Ohio Administrative Knowledge System (OAKS) Voucher Payment Report, which was the only potential source available for testing. The total expenditures for each ESSER program and the respective variances were as follows: Program # of Schools Tested / # With Errors Total Expenditures per Annual Report Total Expenditures per OAKS Variance ESSER I 8 / 8 $43,313,688 $42,615,001 $698,687 ESSER II 9 / 7 $26,292,636 $13,004,131 $13,288,505 ARP ESSER (III) 8 / 8 $5,390,777 $0 $5,390,777 Totals 25 / 23 $74,997,101 $55,119,132 $19,377,969 Without proper procedures in place to ensure the amounts included in the report are complete and accurate, there is an increased risk that amounts reported to the federal grantor agency are incorrect. Inaccurate reporting could subject the Department to fines or other sanctions imposed by the federal grantor agency. Based on discussions with management, changes to the program requirements throughout the period made it difficult for the Department and the school districts to provide accurate information. In addition, not all school districts understood what time period the annual report was to cover which led to inconsistent data being reported in the portal. We recommend the Department implement policies and procedures to ensure that all amounts reported on the annual report are complete and accurate. These procedures should include formally notifying the school districts what period the data should come from, ensuring the data pulled from the portal is complete and accurate prior to compiling it in the annual report, and reconciling the amounts included in the annual report to information provided by the school districts. We further recommend the Department develop procedures on how to handle adjustments the school districts make to the data.
EDUCATION STABILIZATION FUND ? SUBRECIPIENT MONITORING Finding Number: 2022-006 State Agency Number: EDU-01 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 Federal Agency: Department of Education Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 200.332 outlines pass-through entity responsibilities and states, in part, that all pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ? (2) 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 written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. . . . The Department's Office of Federal Programs is responsible for monitoring subrecipients of the Education Stabilization Fund (ESF), including the subprogram, Elementary and Secondary School Emergency Relief (ESSER) Fund. The Office of Federal Programs monitors subrecipient compliance with ESSER program requirements through self-surveys, desk reviews, or on-site reviews based on various risk factors. If noncompliance is identified, the Department requests and reviews the corrective action plan created by the subrecipient. The Office of Federal Programs then performs a follow-up desk review to ensure the subrecipient successfully implemented their corrective action plan. During state fiscal year (SFY) 2022, the Office of Federal Programs identified four noncompliance issues for the ESF ? ESSER program that required corrective action plans. However, for one of two (50%) noncompliance issues selected for testing, the Office of Federal Programs did not obtain a corrective action plan, nor did they perform a follow-up desk review to ensure a corrective action plan was implemented timely and properly. Failure to follow up with subrecipients on noncompliance issues identified through the monitoring process could lead to further noncompliance with federal program regulations, as well as improper use of funding. Based on discussions with management, when the Office of Federal Programs separated the ESSER compliance monitoring out of the Department?s consolidated grants monitoring system into its own individual process at the beginning of SFY 2022, this noncompliance issue which was identified and included in the previous system was missed due to oversight. The Department?s Office of Federal Programs should strengthen existing processes and procedures to ensure that all subrecipients with detected noncompliance issues are properly accounted for in the monitoring records/system. The Department should take measures to ensure each subrecipient with noncompliance issues properly submits a corrective action plan. The Department should then perform a follow-up review to verify the subrecipient has taken timely and appropriate action to address the noncompliance issues identified.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? ANNUAL REPORT Finding Number: 2022-008 State Agency Number: EDU-03 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 S425D210035 / 2021 S425U210035 / 2021 Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS The U.S. Department of Education?s (USED) Office of Elementary and Secondary Education?s website states: All grantees are required to report on Elementary and Secondary School Emergency Relief (ESSER) funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA Act), and the American Rescue Plan (ARP Act). Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Part B(9) of the Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund) between the Department and USED states, in part: ?The Secretary may require additional reporting in the future, which may include: the methodology LEAs [Local Education Agencies] will use to provide services or assistance to students and staff in both public and non-public schools, the uses of funds by the LEAs or other entities and demonstration of their compliance with Section 18003(d) of the CARES Act ... Further, the 2022 U.S. Office of Management and Budget?s Compliance Supplement states, in part: ESSER. . .grantees must submit an annual performance report (OMB No. 1810-0749?) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Per guidance received from USED, the Department was required to submit the annual performance report for the Education Stabilization Fund?s ESSER I, II, and III subprograms between May 31 ? July 1, 2022. The Department submitted the report on July 1, 2022; however, USED noted several errors in the Department?s report and allowed the Department to submit an amended report between August 22 ? September 9, 2022. The Department submitted the amended version on September 8, 2022. Both the original and amended versions of the annual performance report covered the period of October 1, 2020 through June 30, 2021 for ESSER I and the period of July 1, 2020 through June 30, 2021 for ESSER II and ARP ESSER (ESSER III). The Department worked with the Management Council of the Ohio Education Computer Network to create a data portal for each school district to report their ESSER activity. The Department then used this data to compile the annual performance report and upload it into the Data Collection Tool, the application USED established to collect the data. However, while the Department had control procedures in place, they were not sufficient to ensure the completeness and accuracy of the information included in the annual report. In addition, the Department was unable to provide documentation to support the amounts reported. As a result, the total expenditures reported for 23 of 25 school districts selected for testing were not calculated/reported correctly when compared to amounts from the Ohio Administrative Knowledge System (OAKS) Voucher Payment Report, which was the only potential source available for testing. The total expenditures for each ESSER program and the respective variances were as follows: Program # of Schools Tested / # With Errors Total Expenditures per Annual Report Total Expenditures per OAKS Variance ESSER I 8 / 8 $43,313,688 $42,615,001 $698,687 ESSER II 9 / 7 $26,292,636 $13,004,131 $13,288,505 ARP ESSER (III) 8 / 8 $5,390,777 $0 $5,390,777 Totals 25 / 23 $74,997,101 $55,119,132 $19,377,969 Without proper procedures in place to ensure the amounts included in the report are complete and accurate, there is an increased risk that amounts reported to the federal grantor agency are incorrect. Inaccurate reporting could subject the Department to fines or other sanctions imposed by the federal grantor agency. Based on discussions with management, changes to the program requirements throughout the period made it difficult for the Department and the school districts to provide accurate information. In addition, not all school districts understood what time period the annual report was to cover which led to inconsistent data being reported in the portal. We recommend the Department implement policies and procedures to ensure that all amounts reported on the annual report are complete and accurate. These procedures should include formally notifying the school districts what period the data should come from, ensuring the data pulled from the portal is complete and accurate prior to compiling it in the annual report, and reconciling the amounts included in the annual report to information provided by the school districts. We further recommend the Department develop procedures on how to handle adjustments the school districts make to the data.
EDUCATION STABILIZATION FUND ? SUBRECIPIENT MONITORING Finding Number: 2022-006 State Agency Number: EDU-01 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 Federal Agency: Department of Education Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 200.332 outlines pass-through entity responsibilities and states, in part, that all pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ? (2) 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 written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. . . . The Department's Office of Federal Programs is responsible for monitoring subrecipients of the Education Stabilization Fund (ESF), including the subprogram, Elementary and Secondary School Emergency Relief (ESSER) Fund. The Office of Federal Programs monitors subrecipient compliance with ESSER program requirements through self-surveys, desk reviews, or on-site reviews based on various risk factors. If noncompliance is identified, the Department requests and reviews the corrective action plan created by the subrecipient. The Office of Federal Programs then performs a follow-up desk review to ensure the subrecipient successfully implemented their corrective action plan. During state fiscal year (SFY) 2022, the Office of Federal Programs identified four noncompliance issues for the ESF ? ESSER program that required corrective action plans. However, for one of two (50%) noncompliance issues selected for testing, the Office of Federal Programs did not obtain a corrective action plan, nor did they perform a follow-up desk review to ensure a corrective action plan was implemented timely and properly. Failure to follow up with subrecipients on noncompliance issues identified through the monitoring process could lead to further noncompliance with federal program regulations, as well as improper use of funding. Based on discussions with management, when the Office of Federal Programs separated the ESSER compliance monitoring out of the Department?s consolidated grants monitoring system into its own individual process at the beginning of SFY 2022, this noncompliance issue which was identified and included in the previous system was missed due to oversight. The Department?s Office of Federal Programs should strengthen existing processes and procedures to ensure that all subrecipients with detected noncompliance issues are properly accounted for in the monitoring records/system. The Department should take measures to ensure each subrecipient with noncompliance issues properly submits a corrective action plan. The Department should then perform a follow-up review to verify the subrecipient has taken timely and appropriate action to address the noncompliance issues identified.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? ANNUAL REPORT Finding Number: 2022-008 State Agency Number: EDU-03 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 S425D210035 / 2021 S425U210035 / 2021 Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS The U.S. Department of Education?s (USED) Office of Elementary and Secondary Education?s website states: All grantees are required to report on Elementary and Secondary School Emergency Relief (ESSER) funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA Act), and the American Rescue Plan (ARP Act). Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Part B(9) of the Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund) between the Department and USED states, in part: ?The Secretary may require additional reporting in the future, which may include: the methodology LEAs [Local Education Agencies] will use to provide services or assistance to students and staff in both public and non-public schools, the uses of funds by the LEAs or other entities and demonstration of their compliance with Section 18003(d) of the CARES Act ... Further, the 2022 U.S. Office of Management and Budget?s Compliance Supplement states, in part: ESSER. . .grantees must submit an annual performance report (OMB No. 1810-0749?) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Per guidance received from USED, the Department was required to submit the annual performance report for the Education Stabilization Fund?s ESSER I, II, and III subprograms between May 31 ? July 1, 2022. The Department submitted the report on July 1, 2022; however, USED noted several errors in the Department?s report and allowed the Department to submit an amended report between August 22 ? September 9, 2022. The Department submitted the amended version on September 8, 2022. Both the original and amended versions of the annual performance report covered the period of October 1, 2020 through June 30, 2021 for ESSER I and the period of July 1, 2020 through June 30, 2021 for ESSER II and ARP ESSER (ESSER III). The Department worked with the Management Council of the Ohio Education Computer Network to create a data portal for each school district to report their ESSER activity. The Department then used this data to compile the annual performance report and upload it into the Data Collection Tool, the application USED established to collect the data. However, while the Department had control procedures in place, they were not sufficient to ensure the completeness and accuracy of the information included in the annual report. In addition, the Department was unable to provide documentation to support the amounts reported. As a result, the total expenditures reported for 23 of 25 school districts selected for testing were not calculated/reported correctly when compared to amounts from the Ohio Administrative Knowledge System (OAKS) Voucher Payment Report, which was the only potential source available for testing. The total expenditures for each ESSER program and the respective variances were as follows: Program # of Schools Tested / # With Errors Total Expenditures per Annual Report Total Expenditures per OAKS Variance ESSER I 8 / 8 $43,313,688 $42,615,001 $698,687 ESSER II 9 / 7 $26,292,636 $13,004,131 $13,288,505 ARP ESSER (III) 8 / 8 $5,390,777 $0 $5,390,777 Totals 25 / 23 $74,997,101 $55,119,132 $19,377,969 Without proper procedures in place to ensure the amounts included in the report are complete and accurate, there is an increased risk that amounts reported to the federal grantor agency are incorrect. Inaccurate reporting could subject the Department to fines or other sanctions imposed by the federal grantor agency. Based on discussions with management, changes to the program requirements throughout the period made it difficult for the Department and the school districts to provide accurate information. In addition, not all school districts understood what time period the annual report was to cover which led to inconsistent data being reported in the portal. We recommend the Department implement policies and procedures to ensure that all amounts reported on the annual report are complete and accurate. These procedures should include formally notifying the school districts what period the data should come from, ensuring the data pulled from the portal is complete and accurate prior to compiling it in the annual report, and reconciling the amounts included in the annual report to information provided by the school districts. We further recommend the Department develop procedures on how to handle adjustments the school districts make to the data.
EDUCATION STABILIZATION FUND ? SUBRECIPIENT MONITORING Finding Number: 2022-006 State Agency Number: EDU-01 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 Federal Agency: Department of Education Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 200.332 outlines pass-through entity responsibilities and states, in part, that all pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ? (2) 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 written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. . . . The Department's Office of Federal Programs is responsible for monitoring subrecipients of the Education Stabilization Fund (ESF), including the subprogram, Elementary and Secondary School Emergency Relief (ESSER) Fund. The Office of Federal Programs monitors subrecipient compliance with ESSER program requirements through self-surveys, desk reviews, or on-site reviews based on various risk factors. If noncompliance is identified, the Department requests and reviews the corrective action plan created by the subrecipient. The Office of Federal Programs then performs a follow-up desk review to ensure the subrecipient successfully implemented their corrective action plan. During state fiscal year (SFY) 2022, the Office of Federal Programs identified four noncompliance issues for the ESF ? ESSER program that required corrective action plans. However, for one of two (50%) noncompliance issues selected for testing, the Office of Federal Programs did not obtain a corrective action plan, nor did they perform a follow-up desk review to ensure a corrective action plan was implemented timely and properly. Failure to follow up with subrecipients on noncompliance issues identified through the monitoring process could lead to further noncompliance with federal program regulations, as well as improper use of funding. Based on discussions with management, when the Office of Federal Programs separated the ESSER compliance monitoring out of the Department?s consolidated grants monitoring system into its own individual process at the beginning of SFY 2022, this noncompliance issue which was identified and included in the previous system was missed due to oversight. The Department?s Office of Federal Programs should strengthen existing processes and procedures to ensure that all subrecipients with detected noncompliance issues are properly accounted for in the monitoring records/system. The Department should take measures to ensure each subrecipient with noncompliance issues properly submits a corrective action plan. The Department should then perform a follow-up review to verify the subrecipient has taken timely and appropriate action to address the noncompliance issues identified.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? ANNUAL REPORT Finding Number: 2022-008 State Agency Number: EDU-03 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 S425D210035 / 2021 S425U210035 / 2021 Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS The U.S. Department of Education?s (USED) Office of Elementary and Secondary Education?s website states: All grantees are required to report on Elementary and Secondary School Emergency Relief (ESSER) funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA Act), and the American Rescue Plan (ARP Act). Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Part B(9) of the Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund) between the Department and USED states, in part: ?The Secretary may require additional reporting in the future, which may include: the methodology LEAs [Local Education Agencies] will use to provide services or assistance to students and staff in both public and non-public schools, the uses of funds by the LEAs or other entities and demonstration of their compliance with Section 18003(d) of the CARES Act ... Further, the 2022 U.S. Office of Management and Budget?s Compliance Supplement states, in part: ESSER. . .grantees must submit an annual performance report (OMB No. 1810-0749?) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Per guidance received from USED, the Department was required to submit the annual performance report for the Education Stabilization Fund?s ESSER I, II, and III subprograms between May 31 ? July 1, 2022. The Department submitted the report on July 1, 2022; however, USED noted several errors in the Department?s report and allowed the Department to submit an amended report between August 22 ? September 9, 2022. The Department submitted the amended version on September 8, 2022. Both the original and amended versions of the annual performance report covered the period of October 1, 2020 through June 30, 2021 for ESSER I and the period of July 1, 2020 through June 30, 2021 for ESSER II and ARP ESSER (ESSER III). The Department worked with the Management Council of the Ohio Education Computer Network to create a data portal for each school district to report their ESSER activity. The Department then used this data to compile the annual performance report and upload it into the Data Collection Tool, the application USED established to collect the data. However, while the Department had control procedures in place, they were not sufficient to ensure the completeness and accuracy of the information included in the annual report. In addition, the Department was unable to provide documentation to support the amounts reported. As a result, the total expenditures reported for 23 of 25 school districts selected for testing were not calculated/reported correctly when compared to amounts from the Ohio Administrative Knowledge System (OAKS) Voucher Payment Report, which was the only potential source available for testing. The total expenditures for each ESSER program and the respective variances were as follows: Program # of Schools Tested / # With Errors Total Expenditures per Annual Report Total Expenditures per OAKS Variance ESSER I 8 / 8 $43,313,688 $42,615,001 $698,687 ESSER II 9 / 7 $26,292,636 $13,004,131 $13,288,505 ARP ESSER (III) 8 / 8 $5,390,777 $0 $5,390,777 Totals 25 / 23 $74,997,101 $55,119,132 $19,377,969 Without proper procedures in place to ensure the amounts included in the report are complete and accurate, there is an increased risk that amounts reported to the federal grantor agency are incorrect. Inaccurate reporting could subject the Department to fines or other sanctions imposed by the federal grantor agency. Based on discussions with management, changes to the program requirements throughout the period made it difficult for the Department and the school districts to provide accurate information. In addition, not all school districts understood what time period the annual report was to cover which led to inconsistent data being reported in the portal. We recommend the Department implement policies and procedures to ensure that all amounts reported on the annual report are complete and accurate. These procedures should include formally notifying the school districts what period the data should come from, ensuring the data pulled from the portal is complete and accurate prior to compiling it in the annual report, and reconciling the amounts included in the annual report to information provided by the school districts. We further recommend the Department develop procedures on how to handle adjustments the school districts make to the data.
EDUCATION STABILIZATION FUND ? SUBRECIPIENT MONITORING Finding Number: 2022-006 State Agency Number: EDU-01 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 Federal Agency: Department of Education Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 200.332 outlines pass-through entity responsibilities and states, in part, that all pass-through entities must: . . . (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: ? (2) 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 written confirmation from the subrecipient, highlighting the status of actions planned or taken to address Single Audit findings related to the particular subaward. . . . The Department's Office of Federal Programs is responsible for monitoring subrecipients of the Education Stabilization Fund (ESF), including the subprogram, Elementary and Secondary School Emergency Relief (ESSER) Fund. The Office of Federal Programs monitors subrecipient compliance with ESSER program requirements through self-surveys, desk reviews, or on-site reviews based on various risk factors. If noncompliance is identified, the Department requests and reviews the corrective action plan created by the subrecipient. The Office of Federal Programs then performs a follow-up desk review to ensure the subrecipient successfully implemented their corrective action plan. During state fiscal year (SFY) 2022, the Office of Federal Programs identified four noncompliance issues for the ESF ? ESSER program that required corrective action plans. However, for one of two (50%) noncompliance issues selected for testing, the Office of Federal Programs did not obtain a corrective action plan, nor did they perform a follow-up desk review to ensure a corrective action plan was implemented timely and properly. Failure to follow up with subrecipients on noncompliance issues identified through the monitoring process could lead to further noncompliance with federal program regulations, as well as improper use of funding. Based on discussions with management, when the Office of Federal Programs separated the ESSER compliance monitoring out of the Department?s consolidated grants monitoring system into its own individual process at the beginning of SFY 2022, this noncompliance issue which was identified and included in the previous system was missed due to oversight. The Department?s Office of Federal Programs should strengthen existing processes and procedures to ensure that all subrecipients with detected noncompliance issues are properly accounted for in the monitoring records/system. The Department should take measures to ensure each subrecipient with noncompliance issues properly submits a corrective action plan. The Department should then perform a follow-up review to verify the subrecipient has taken timely and appropriate action to address the noncompliance issues identified.
TITLE I AND ESF ? TRANSPARENCY ACT REPORTING Finding Number: 2022-007 State Agency Number: EDU-02 Assistance Listing Numbers and Titles: 84.010 Title I Grants to Local Educational Agencies (Title I) 84.425 COVID19 ? Education Stabilization Fund (ESF) Federal Award Identification Number / Year: S010A210035 / 2021 (Title I) S425D210035 / 2021 (ESF) S425U210035 / 2021 (ESF) Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-007 NONCOMPLIANCE AND MATERIAL WEAKNESS (ESF) MATERIAL WEAKNESS (TITLE I) The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year (SFY) 2022, the Department disbursed approximately $2.3 billion for 2,656 subawards which were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 84.010 Title I Grants to Local Educational Agencies 926 $599,386,863 84.425 Education Stabilization Fund 1,730 $1,679,497,863 The Data Administration Manager runs the SAS Enterprise Guide program on the first of the month to capture the prior month?s allocations, exports the data to an Excel master file, and performs a self-review of the data using the Department?s Comprehensive Continuous Improvement Plan (CCIP) system. Once completed, the Excel master file is sent to the Senior Financial Analyst, who separates the files by Federal Award Identification Number (FAIN) and then uploads the data into the FSRS website for processing. Once the report is uploaded into FSRS, the Senior Financial Analyst runs an error report, manually corrects all errors from the report, and resubmits the data into FSRS. However, the following weaknesses in the process were noted: - There was no supervisory level review of the subaward information entered into the FSRS website to ensure compliance with reporting requirements and accuracy of the reports for Title I and ESF. - The Department does not reconcile the subaward information entered into the FSRS website to available independent sources (such as the USASpending.gov site, an official data source for federal spending) to ensure the reports are complete and accurate. - The Department established formalized policies and procedures during the audit period related to Transparency Act reporting, however they were not implemented until FY 2023. As a result of these weaknesses, the following errors were noted for the Education Stabilization Fund (ESF): Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 60 0 19 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $661,489,723 $0 $220,306,705 $0 $0 ESF includes 23 subprograms that were awarded by the U.S. Department of Education throughout the COVID-19 pandemic for different purposes, including the Elementary and Secondary School Emergency Relief Fund (ESSER) which was awarded in two different allotments (known as ESSER I and II). The Department indicated that it did not submit ESSER II subawards with an obligation date prior to July 1, 2021 within the required deadlines as all ESSER II subawards were reported on August 31, 2021. We analyzed all ESSER II subawards reported during SFY 2022 and noted that 571 of 1,730 ESF subawards subject to FFATA reporting (33%), totaling $1,255,667,439, with an obligation date prior to July 1, 2021 were not submitted timely in the FSRS website during SFY 2022. A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussions with management, they have been working on the policies and procedures, training a new employee to compile the report, and implementing review processes, but they were not able to implement them during the audit period. As a result, there were errors made due to the lack of a supervisory review of the report compilation prior to submission as well as oversight during the compilation process. We recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include, but not be limited to: - A supervisory review of the report information before it is submitted on the FSRS website. - A reconciliation of the report information to what is reported on USAspending.gov. We further recommend the Department periodically evaluate and update its policies and procedures for the Transparency Act reporting process to ensure they are reflective of the process and are consistent with management?s objectives.
EDUCATION STABILIZATION FUND ? ANNUAL REPORT Finding Number: 2022-008 State Agency Number: EDU-03 Assistance Listing Number and Title: 84.425 COVID-19 ? Education Stabilization Fund Federal Award Identification Number / Year: S425D200035 / 2020 S425D210035 / 2021 S425U210035 / 2021 Federal Agency: Department of Education Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS The U.S. Department of Education?s (USED) Office of Elementary and Secondary Education?s website states: All grantees are required to report on Elementary and Secondary School Emergency Relief (ESSER) funds received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA Act), and the American Rescue Plan (ARP Act). Grantees must submit an annual report describing how the State and subrecipients used the awarded funds during the performance period. Part B(9) of the Certification and Agreement for Funding under the Education Stabilization Fund Program Elementary and Secondary School Emergency Relief Fund (ESSER Fund) between the Department and USED states, in part: ?The Secretary may require additional reporting in the future, which may include: the methodology LEAs [Local Education Agencies] will use to provide services or assistance to students and staff in both public and non-public schools, the uses of funds by the LEAs or other entities and demonstration of their compliance with Section 18003(d) of the CARES Act ... Further, the 2022 U.S. Office of Management and Budget?s Compliance Supplement states, in part: ESSER. . .grantees must submit an annual performance report (OMB No. 1810-0749?) with data on expenditures, planned expenditures, subrecipients, and uses of funds, including for mandatory reservations. Per guidance received from USED, the Department was required to submit the annual performance report for the Education Stabilization Fund?s ESSER I, II, and III subprograms between May 31 ? July 1, 2022. The Department submitted the report on July 1, 2022; however, USED noted several errors in the Department?s report and allowed the Department to submit an amended report between August 22 ? September 9, 2022. The Department submitted the amended version on September 8, 2022. Both the original and amended versions of the annual performance report covered the period of October 1, 2020 through June 30, 2021 for ESSER I and the period of July 1, 2020 through June 30, 2021 for ESSER II and ARP ESSER (ESSER III). The Department worked with the Management Council of the Ohio Education Computer Network to create a data portal for each school district to report their ESSER activity. The Department then used this data to compile the annual performance report and upload it into the Data Collection Tool, the application USED established to collect the data. However, while the Department had control procedures in place, they were not sufficient to ensure the completeness and accuracy of the information included in the annual report. In addition, the Department was unable to provide documentation to support the amounts reported. As a result, the total expenditures reported for 23 of 25 school districts selected for testing were not calculated/reported correctly when compared to amounts from the Ohio Administrative Knowledge System (OAKS) Voucher Payment Report, which was the only potential source available for testing. The total expenditures for each ESSER program and the respective variances were as follows: Program # of Schools Tested / # With Errors Total Expenditures per Annual Report Total Expenditures per OAKS Variance ESSER I 8 / 8 $43,313,688 $42,615,001 $698,687 ESSER II 9 / 7 $26,292,636 $13,004,131 $13,288,505 ARP ESSER (III) 8 / 8 $5,390,777 $0 $5,390,777 Totals 25 / 23 $74,997,101 $55,119,132 $19,377,969 Without proper procedures in place to ensure the amounts included in the report are complete and accurate, there is an increased risk that amounts reported to the federal grantor agency are incorrect. Inaccurate reporting could subject the Department to fines or other sanctions imposed by the federal grantor agency. Based on discussions with management, changes to the program requirements throughout the period made it difficult for the Department and the school districts to provide accurate information. In addition, not all school districts understood what time period the annual report was to cover which led to inconsistent data being reported in the portal. We recommend the Department implement policies and procedures to ensure that all amounts reported on the annual report are complete and accurate. These procedures should include formally notifying the school districts what period the data should come from, ensuring the data pulled from the portal is complete and accurate prior to compiling it in the annual report, and reconciling the amounts included in the annual report to information provided by the school districts. We further recommend the Department develop procedures on how to handle adjustments the school districts make to the data.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
SNAP CLUSTER AND TANF ? IEVS ALERTS Finding Number: 2022-013 State Agency Number: JFS-05 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2022 (SNAP Cluster) 222OH102S6018 / 2022 (SNAP Cluster) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Eligibility, Special Tests and Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-013 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001, and 2022-017 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.8(c), states the following regarding the Supplemental Nutrition Assistance Program (SNAP) Cluster: (1) State agency action on information items about recipient households shall include: (i) Review of the information and comparison of it to case record information; (ii) For all new or previously unverified information received, contact with the households and/or collateral contacts to resolve discrepancies as specified in ???273.2(f)(4)(iv) and 273.2 (f)(9)(iii) and (f)(9)(iv); and (iii) If discrepancies warrant reducing benefits or terminating eligibility, notices of adverse action. (2) State agencies must initiate and pursue the actions on recipient households specified in paragraph (c)(1) of this section so that the actions are completed within 45 days of receipt of the information items. Actions may be completed later than 45 days from the receipt of information if: (A) The only reason that the actions cannot be completed is the nonreceipt of verification requested from collateral contacts; and (B) The actions are completed as specified in ? 273.12 of this chapter when verification from a collateral contact is received or in conjunction with the next case action when such verification is not received, whichever is earlier. (3) When the actions specified in paragraph (c)(1) of this section substantiate an over issuance, State agencies must establish and take actions on claims as specified in ??273.18 of this chapter. (4) State agencies must use appropriate procedures to monitor the timeliness requirements in paragraph (c)(2) of this section. 45 C.F.R. ? 205.56(a)(1)(iv) states the following regarding the Temporary Assistance for Needy Families (TANF) program: For individuals who are recipients when the information is received or for whom a decision could not be made prior to authorization of benefits, the State agency shall within forty-five (45) days of its receipt, initiate a notice of case action or an entry in the case record that no case action is necessary, except that: Completion of action may be delayed beyond forty-five (45) days on no more than twenty (20) percent of the information items targeted for follow-up, if: (A) The reason that the action cannot be completed within forty-five (45) days is the nonreceipt of requested third-party verification; and (B) Action is completed promptly, when third party verification is received or at the next time eligibility is redetermined, whichever is earlier. If action is completed when eligibility is redetermined and third party verification has not been received, the State agency shall make its decision based on information provided by the recipient and any other information in its possession. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. The Ohio Benefits system is utilized for processing eligibility for the SNAP Cluster and TANF programs with total expenditures to recipients of approximately $4.5 billion and $204 million, respectively, in state fiscal year (SFY) 2022. The Ohio Benefits system, administered by the Ohio Department of Administrative Services (DAS) for various public assistance programs, includes an Income Eligibility Verification System (IEVS) which compares income, as reported by the recipients, to information maintained by outside sources. Information that does not agree is communicated in the form of an Ohio Benefits system alert, which is forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming Internal Revenue Service (IRS) alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct and monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts. Also, the JFSR 4005, IEVS Monthly Summary Report, continues to be monitored by the Department?s Fraud Control staff to better recognize those county agencies who require additional training and technical assistance; however, no evidence is documented or maintained. The Department also continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. Therefore, the Department did not have effective controls or procedures in place to review and monitor the IEVS alerts generated and processed by the Ohio Benefits system to ensure they were being completed by the counties in accordance with the requirements and timeframes established in 7 C.F.R. ? 272.8, and 45 C.F.R. ? 205.56. Furthermore, an Ohio Benefits report showed 349,020 of the 556,539 (63%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, for an average of 189 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframes increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that continue to reduce the number of alerts sent to county caseworkers. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to perform periodic and timely reviews at the Department level to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. Such procedures should also include required monitoring by each County IEVS Coordinator or other supervisory personnel (through the eligibility system), which should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to monitor the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper timeframes, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Continuing to conduct and evaluate statewide and individual IEVS training for county caseworkers to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system. These trainings should be mandatory for all county personnel involved in the alerts process. We also recommend Department management continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
TANF ? REPORTING Finding Number: 2022-016 State Agency Number: JFS-08 Assistance Listing Number and Title: 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 1901OHTANF / 2019 2001OHTANF / 2020 2101OHTANF / 2021 2201OHTANF / 2022 Federal Agency: Department of Health and Human Services Compliance Requirements: Reporting, Special Tests and Provisions Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ? 265.3 (b) states, in part: The TANF Data Report consists of four sections. Two sections contain disaggregated data elements and two sections contain aggregated data elements. (1) Disaggregated Data on Families Receiving TANF Assistance?Section one. Each State must file disaggregated information on families receiving TANF assistance. This section specifies identifying and demographic data such as the individual's Social Security Number and information such as the amount of assistance received, educational level, employment status, work participation activities, citizenship status, and earned and unearned income. The data must be provided for both adults and children. ? 45 C.F.R. ? 261.62 states, in part: (a) To ensure accuracy in the reporting of work activities by work-eligible individuals on the TANF Data Report, each State must: . . . (2) Establish and employ procedures for determining how to count and verify reported hours of work; (4) Establish and employ internal controls to ensure compliance with the procedures; and (5) Submit to the Secretary for approval the State's Work Verification Plan ? (b) A State's Work Verification Plan must include the following: . . . (1) For each countable work activity: (i) A description demonstrating how the activity meets the relevant definition at ??261.2; (ii) A description of how the State determines the number of countable hours of participation; and (iii) A description of the documentation it uses to monitor participation and ensure that the actual hours of participation are reported; (3) A description of how the State ensures that, for each work-eligible individual, it: (iii) Accurately reports the hours to the Department; (5) A description of the internal controls that the State has implemented to ensure a consistent measurement of the work participation rates, including the quality assurance processes and sampling specifications it uses to monitor adherence to the established work verification procedures by State staff, local staff, and contractors. . . . It is management?s responsibility to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with program requirements. It is imperative that management be able to provide the underlying data and related documentation required to prepare and support these reports. During the audit period, the Department disbursed approximately $203.7 million in TANF benefits. The Department must meet or exceed its minimum annual work participation rates, as documented, and submitted through the ACF-199 TANF Data Report (TDR). The Department partners with the Ohio Department of Administrative Services (DAS), in coordination with an IT vendor, who is responsible for compiling all information provided from the Ohio Benefits (OB) eligibility system and delivering the TDR to the U.S. Department of Health and Human Services ? Administration for Children and Families (ACF). The OB system has controls in place that ensure all required data elements are completed and that only pre-determined acceptable data can be entered into the data fields. The Work Participation Rate Determination batch uses the OB rules engine to determine whether work eligible individuals active on TANF programs have met their work requirements for the month being processed. Monthly, TANF data (case record information on individuals and families) is extracted from OB and compiled into a TANF Data Universe file. Quarterly, DAS extracts data to complete the TDR using a sample of the TANF Data Universe file and submits the sample data electronically to ACF. Prior to submission of the report, the Department?s TANF Federal Reporting Team reviews the sample data to ensure completeness and accuracy. This is a system analysis process, where program code is reviewed and corrections are implemented. However, for one of 20 (5%) case files selected for testing, incorrect OB logic was applied which added 8 holiday hours to each day the individual worked that month. Without the incorrectly added holiday hours, the case did not have enough hours to meet work participation requirements for the Job Search and Job Readiness Assistance (JS/JR) hours; therefore, the hours should have been reported as Other Work Activities (OWA). The TDR identified 30 hours JS/JR and 5 hours OWA but should have identified 0 hours and 16 hours, respectively. As a result, the JS/JR data line was overstated by 30 hours and the OWA line was understated by 11 hours. If the OB business rules for calculating work participation rates are not working as intended, the Department and the federal government may not be reasonably assured the information is accurate and complete. Reporting inaccurate or incomplete information could subject the Department to sanctions imposed by the federal grantor agency, limiting the amount of funding for program activities. Based on discussions with management, the OB system logic was improperly applying holiday hours to work participation activities due to errors in the coding/business rules. We recommend the Department evaluate current procedures and implement additional policies and procedures as necessary to provide reasonable assurance the data being reported in the TDR is reasonable, accurate, and agrees to supporting documentation. Additionally, we recommend the Department work collaboratively with DAS to: ? Review the data compiling and reporting processes and make any changes or adjustments as necessary. ? Update and/or implement program logic to ensure the calculations for work participation activities when compiling the TDR are in accordance with the federal regulations. ? Evaluate and make any necessary adjustments to the TDR based on this incorrect logic and resubmit to ACF as appropriate.
SNAP CLUSTER AND TANF ? ELIGIBILITY SYSTEM Finding Number: 2022-017 State Agency Number: JFS-09 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) Federal Award Identification Number / Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2022 (TANF) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-018 MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-013 contain additional information which is integral to and should be read in conjunction with this finding. 7 C.F.R. ? 272.10(b)(1)(i), pertaining to the SNAP Cluster, states in part, that a State?s system should: Determine eligibility and calculate benefits or validate the eligibility worker?s calculations by processing and storing all casefile information necessary for the eligibility determination and benefit computation (including but not limited to all household members? names, addresses, dates of birth, social security numbers, individual household members? earned and unearned income by source, deductions, resources and household size) ? 45 C.F.R. ? 206.10(a), pertaining to public assistance programs, including TANF, states in part: ? (8) Each decision regarding eligibility or ineligibility will be supported by facts in the applicant?s or recipient?s case record? ? (12) The State agency shall establish and maintain methods by which it shall be kept currently informed about local agencies' adherence to the State plan provisions and to the State agency's procedural requirements for determining eligibility, and it shall take corrective action when necessary. As the lead agency responsible for administering the SNAP Cluster and TANF federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is also responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of nearly $4.7 billion in public assistance payments, to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients * 10.551/10.561 ? SNAP Cluster $ 4,465,389,555 1,502,137 93.558 ? TANF $ 203,674,740 73,104 Combined Total $ 4,669,064,295 1,575,241 * We did not separately identify recipients who could be covered under both programs These programs are administered using a multi-agency approach, as follows: overall compliance and administration of the SNAP Cluster and TANF programs fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration, Internal Revenue Service (IRS), etc.). The Department also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system for processing. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the SNAP Cluster and TANF programs according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, the Ohio Department of Medicaid, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department conducts Fraud Triad Reviews, which in part, includes a review of 1) IEVS processing timeliness, 2) proper verifications, 3) proper disposition coding and 4) random supervisory reviews. County agencies who fall short in their IEVS processing, such as no verifications or incorrect compliance coding, are required to take corrective action which is monitored by the Department?s Fraud Control Section. County supervisors are instructed to conduct random reviews of the cases with an IEVS alert to ensure verifications are obtained and disposition codes are correct, as well as monitor the JFSR 4005, IEVS Monthly Summary Report to track the completion of IEVS alerts: these random reviews are looked at during the Fraud Triad Reviews. Also, the Department?s Fraud Control staff monitors the JFSR 4005, IEVS Monthly Summary Report to better recognize those county agencies which require additional training and technical assistance; however, no evidence of this monitoring is documented or maintained. ? Caseworker Reliance/Training ? The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. The Department continues to conduct statewide trainings and individual trainings for counties to assist them in working IEVS alerts; however, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. Failure to correct system weaknesses and system alerts creates an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. Management indicated they continue to monitor the system and enhancements to ensure they meet the desired impact, as well as reach out to county and state personnel to offer technical assistance. While training is offered and made available to county personnel, management indicated the Department?s state supervised, county administered approach creates challenges to making training mandatory. We recommend Department management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Continuing to perform periodic and timely reviews of the JFSR 4005, IEVS Monthly Summary Report to monitor the status and completion of IEVS alerts; these reviews should be evidenced and documented. The Department should also continue to perform monitoring reviews which should include verification that each County IEVS Coordinator, or other supervisory personnel, is conducting random reviews of the IEVS alerts (through the eligibility system) to determine the appropriate disposition of the alert and that it was worked timely. These random reviews should be explicitly identified in the sub-grant agreements with the counties and include appropriate ramifications for noncompliance with the stated requirements. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. The Department should continue to provide this training initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
CDBG AND LIHEAP ? TRANSPARENCY ACT REPORTING Finding Number: 2022-004 State Agency Number: DEV-03 Assistance Listing Number and Title: 14.228 Community Development Block Grants/State?s Program and Non-Entitlement Grants in Hawaii (CDBG) 93.568 Low-Income Home Energy Assistance Program (LIHEAP) Federal Award Identification Number / Year: B-21-DC-39-0001 / 2021 (CDBG) 2101OHLIEA / 2021 (LIHEAP) Federal Agencies: Department of Housing and Urban Development Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-005 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department disbursed approximately $89 million for 236 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs: Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 14.228 CDBG 83 $27,193,724 93.568 LIHEAP 153 $61,742,923 The Department?s Finance Division managed Transparency Act reporting for all applicable programs, overseen by the Grant Strategy Manager. A tracking spreadsheet is maintained with all grants required to be reported or updated on the FSRS website with the key data elements required by the Transparency Act. The information within this spreadsheet is compiled from reports generated by the OCEAN system which the Department uses to track and maintain information on subgrant activity. Information within OCEAN is compiled by the grants personnel responsible for each federal program at the Department as well as through reporting via web interface by the subgrantee. However, there is no supervisory review of the Transparency Act reports prior to submission on the FSRS website. Further, the control procedures were not operating effectively and as a result, the following errors were noted for CDBG and LIHEAP: CDBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 3 9 3 3 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $3,016,000 $470,000 $3,016,000 $470,000 $470,000 LIHEAP Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 15 10 15 10 10 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,311,919 $ 4,728,604 $6,311,919 $4,728,604 $ 4,728,604 A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act Reports could be relying on inaccurate information. Based on discussions with management, the errors were due to beginning implementation of the reporting process late in the audit period. Additionally, the Department experienced difficulty in identifying all subawards made amongst the different offices responsible for administering federal awards, as well as obtaining all subaward information required to be reported under the Transparency Act. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards subject to the Transparency Act. We also recommend the Department continue implementation of its Transparency Act reporting process, including the process by which subawards are identified. Management should consider incorporating the input of the applicable offices within the Department to improve the process for identifying subawards and the key data elements for reporting, as well as the timeliness of reporting within the FSRS system. Management should periodically review these procedures to ensure they promote compliance with federal regulations and are operating as intended.
LIHEAP ? CASH MANAGEMENT Finding Number: 2022-005 State Agency Number: DEV-04 Assistance Listing Program Number and Title: 93.568 Low-Income Home Energy Assistance Program 93.568 COVID-19 Low-Income Home Energy Assistance Program Federal Award Identification Number / Year: 1901OHLIEA / 2019 2001OHLIEA / 2020 2001OHLIE4 / 2020 2001OHE5C3 / 2020 2101OHLIEA / 2021 2101OHLIE4 / 2021 2101OHE5C6 / 2021 2101OHLWC5 / 2021 2101OHLWC5 / 2021 Federal Agency: Department of Health and Human Services Compliance Requirement: Cash Management Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-003 NONCOMPLIANCE AND MATERIAL WEAKNESS 31 C.F.R. Part 205 ? 11 states, in part: (a) A State and a Federal Program Agency must minimize the time elapsing between the transfer of funds from the United States Treasury and the State's payout of funds for Federal assistance program purposes, whether the transfer occurs before or after the payout of funds. (b) A State and a Federal Program Agency must limit the amount of funds transferred to the minimum required to meet a State's actual and immediate cash needs. . . . To define these allowable timeframes, the State of Ohio and the U.S. Department of the Treasury entered into a Cash Management Improvement Act (CMIA) Agreement which requires the Department to utilize the Modified Pre-Issuance Methodology when requesting federal funds for the Low-Income Home Energy Assistance Program (LIHEAP). Section 6.2.4 of the agreement regarding the Modified Pre-Issuance Methodology states, in part: . . . The State shall request funds such that they are deposited in a State account not more than eight business days prior to the day the State makes a disbursement. . . The amount of the request shall be the amount the State expects to disburse. . . Furthermore, an entity?s system of internal controls consists of the policies and procedures established by management to provide reasonable assurance that it complies with applicable rules and regulations and those specific operational objectives are achieved. These policies establish the authorization level for financial and operational transactions to be executed and are meant to accomplish management's goals and professional and statutory requirements. During state fiscal year 2022, the Department drew down approximately $305.6 million in federal funding for LIHEAP. The Department utilizes the CMIA Agreement, as well as internal policies and procedures as a guide for completing federal draws. The Department compiles a worksheet of all payment requests for administrative and program costs associated with providing LIHEAP assistance in order to determine the amount of federal funds to be drawn. This evaluation includes year-to-date disbursements, year-to-date revenues, and any refunds received and/or pending. However, for seven of 13 (53.8%) federal draws selected for testing, the Department's worksheet did not contain sufficient information to allow disbursements to be tied to a specific draw. As a result, it was not possible to determine if these draws were disbursed timely in accordance with the CMIA Agreement (within eight business days). Management implemented changes to the federal draw process in February 2022 to tie specific disbursements to the related federal draw. As a result, the other six draws tested were after the implementation date and contained the required payment requests documentation so they could be tested for compliance with the CMIA Agreement. Without procedures in place which allow for ensuring timely disbursement of funds in accordance with federal requirements and the CMIA Agreement, interest penalties may be incurred by the State of Ohio. This could also subject the Department to sanctions or other penalties by the federal grantor agency. Based on discussions with management, they had not previously considered developing a process that would allow them to match federal disbursements to the related federal draw prior to fiscal year 2021. We recommend the Department periodically review and update its federal draw procedures to ensure they promote compliance with applicable cash management guidance. These procedures should include an adequate review by management to ensure they are properly documented and operating as intended.
LIHEAP ? CASH MANAGEMENT Finding Number: 2022-005 State Agency Number: DEV-04 Assistance Listing Program Number and Title: 93.568 Low-Income Home Energy Assistance Program 93.568 COVID-19 Low-Income Home Energy Assistance Program Federal Award Identification Number / Year: 1901OHLIEA / 2019 2001OHLIEA / 2020 2001OHLIE4 / 2020 2001OHE5C3 / 2020 2101OHLIEA / 2021 2101OHLIE4 / 2021 2101OHE5C6 / 2021 2101OHLWC5 / 2021 2101OHLWC5 / 2021 Federal Agency: Department of Health and Human Services Compliance Requirement: Cash Management Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-003 NONCOMPLIANCE AND MATERIAL WEAKNESS 31 C.F.R. Part 205 ? 11 states, in part: (a) A State and a Federal Program Agency must minimize the time elapsing between the transfer of funds from the United States Treasury and the State's payout of funds for Federal assistance program purposes, whether the transfer occurs before or after the payout of funds. (b) A State and a Federal Program Agency must limit the amount of funds transferred to the minimum required to meet a State's actual and immediate cash needs. . . . To define these allowable timeframes, the State of Ohio and the U.S. Department of the Treasury entered into a Cash Management Improvement Act (CMIA) Agreement which requires the Department to utilize the Modified Pre-Issuance Methodology when requesting federal funds for the Low-Income Home Energy Assistance Program (LIHEAP). Section 6.2.4 of the agreement regarding the Modified Pre-Issuance Methodology states, in part: . . . The State shall request funds such that they are deposited in a State account not more than eight business days prior to the day the State makes a disbursement. . . The amount of the request shall be the amount the State expects to disburse. . . Furthermore, an entity?s system of internal controls consists of the policies and procedures established by management to provide reasonable assurance that it complies with applicable rules and regulations and those specific operational objectives are achieved. These policies establish the authorization level for financial and operational transactions to be executed and are meant to accomplish management's goals and professional and statutory requirements. During state fiscal year 2022, the Department drew down approximately $305.6 million in federal funding for LIHEAP. The Department utilizes the CMIA Agreement, as well as internal policies and procedures as a guide for completing federal draws. The Department compiles a worksheet of all payment requests for administrative and program costs associated with providing LIHEAP assistance in order to determine the amount of federal funds to be drawn. This evaluation includes year-to-date disbursements, year-to-date revenues, and any refunds received and/or pending. However, for seven of 13 (53.8%) federal draws selected for testing, the Department's worksheet did not contain sufficient information to allow disbursements to be tied to a specific draw. As a result, it was not possible to determine if these draws were disbursed timely in accordance with the CMIA Agreement (within eight business days). Management implemented changes to the federal draw process in February 2022 to tie specific disbursements to the related federal draw. As a result, the other six draws tested were after the implementation date and contained the required payment requests documentation so they could be tested for compliance with the CMIA Agreement. Without procedures in place which allow for ensuring timely disbursement of funds in accordance with federal requirements and the CMIA Agreement, interest penalties may be incurred by the State of Ohio. This could also subject the Department to sanctions or other penalties by the federal grantor agency. Based on discussions with management, they had not previously considered developing a process that would allow them to match federal disbursements to the related federal draw prior to fiscal year 2021. We recommend the Department periodically review and update its federal draw procedures to ensure they promote compliance with applicable cash management guidance. These procedures should include an adequate review by management to ensure they are properly documented and operating as intended.
WIOA CLUSTER AND FOSTER CARE ? FEDERAL REPORTING Finding Number: 2022-014 State Agency Number: JFS-06 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.568 ? Foster Care Title IV-E Federal Award Identification Number / Year: AA36339DQ0 / 2021 (WIOA Cluster) 2101OHFOST / 2021 (Foster Care) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ? 75.302 contains the Department of Health and Human Services uniform administrative requirements for grants to state and local governments relating to financial administration and standards for financial management systems. Specifically, 45 C.F.R. ? 75.302 states, in part: (a) Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds. In addition, the state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. (b) The financial management system of each non-Federal entity must provide for the following (see also Sections 75.361, .362, .363, .364, and .365): . . . (2) Accurate, current, and complete disclosure of the financial results of each Federal award or program in accordance with the reporting requirements set forth in Section 75.341 and .342? (3) Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation. . . . The Department of Labor implemented similar uniform administrative requirements in 29 C.F.R. ? 97.20 which states, in part: (a) A State must expand and account for grant funds in accordance with State laws and procedures for expending and accounting for its own funds. Fiscal control and accounting procedures of the State, as well as its subgrantees and cost-type contractors, must be sufficient to - (1) Permit preparation of reports required by this part and the statutes authorizing the grant, and (2) Permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of applicable statutes. (b) The financial management systems of other grantees and sub grantees must meet the following standards: (1) Financial reporting. Accurate, current, and complete disclosure of the financial results of financially assisted activities must be made in accordance with the financial reporting requirements of the grant or subgrant. (2) Accounting records. Grantees and sub grantees must maintain records which adequately identify the source and application of funds provided for financially-assisted activities. These records must contain information pertaining to grant or subgrant awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays or expenditures, and income. . . . It is management?s responsibility to implement control policies and procedures to reasonably ensure the federal reports they submit are accurate, complete, and in compliance with program requirements. It is imperative that management be able to provide the underlying data and related program documentation required to prepare and support these reports. The Department?s Bureau of Grants Management and Federal Reporting Services (the Bureau) is responsible for the preparation of various federal financial expenditure reports, including the quarterly Foster Care CB-496 and quarterly WIOA Cluster ETA-9130 reports. The Bureau runs reports from various computer systems, transfers this information to the applicable federal reports, and submits them for a two-level review process prior to submitting them to the federal grantor agency. However, the Bureau?s review of federal reports was not adequate and/or operating effectively. As a result, the following errors were identified in the reports tested during state fiscal year 2022: ? For one of two (50%) quarterly Foster Care CB-496 reports selected for testing (quarter ending September 30, 2021): o The Bureau overstated Line 10a - Current Quarter Claims, Title IV-E Foster Care Candidate Administrative Costs - Case Planning and Management by $2,183 and the federal share for the line by $1,091. The Bureau included an amount that was already properly reported in another line. o The Bureau overstated Line 16a - Demonstration Project Costs by $63,500 and the federal share for the line by $31,750. The Bureau improperly reported the total claim amount as the federal share amount. o The Bureau incorrectly reported a decreasing prior quarter adjustment in Line 5 ? In-Placement Administrative Costs ? Case Planning and Management instead of Line 6 ? In-Placement Administrative Costs ? Eligibility Determinations. This caused line 5 to be understated by $171 and the federal share for the line to be understated by $85. As a result, Line 6 was overstated by the same amounts. ? For one of 15 (6.7%) quarterly WIOA Cluster ETA-9130 reports selected for testing (Statewide Rapid Response for quarter ending March 31, 2022): o The Bureau reported Line 10g - Federal Share of Unliquidated Obligations as $59,668; however, supporting documentation showed the amount to be $44,755, for an overstatement of $14,913. A lack of adequate internal controls over federal reporting increases the risk that reports submitted to the federal grantor agency are inaccurate. If the underlying data for the submitted reports cannot be readily verified, the Department and the federal government may not be reasonably assured the information is accurate and complete. Reporting inaccurate or incomplete information could subject the Department to federal sanctions, limiting the amount of funding for program activities. Based on discussions with management, these errors were due to oversight. We recommend the Department evaluate current procedures and implement additional policies and procedures as necessary to provide reasonable assurance the data being reported for all federal programs is reasonable and accurate and agrees to supporting documentation. The Department should ensure all reports (and any necessary corrections to reports) are reviewed and approved by the appropriate level of management.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-015 State Agency Number: JFS-07 Assistance Listing Number and Title: 17.258/17.259/17.278 ? WIOA Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.558 COVID-19 ? TANF 93.658 ? Foster Care Title IV-E (FC) 93.659 ? Adoption Assistance (AA) 93.667 ? Social Services Block Grant (SSBG) Federal Award Identification Number / Year: AA363392155A39 / 2021 (WIOA Cluster) 2001OHTANF / 2020 (TANF) 2201OHTANF / 2022 (TANF) 2101OHFOST / 2021 (FC) 2101OHADPT / 2021 (AA) 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) Federal Agencies: Department of Labor Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-015 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $475.5 million for 1,038 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Obligated 17.258/17.259/17.278 WIOA Cluster 80 $49,733,463 93.558 TANF 529 $291,384,082 93.658 Foster Care-Title IV-E 81 $63,417,735 93.659 Adoption Assistance 59 $11,592,409 93.667 Social Services Block Grant 289 $59,436,738 For county subaward reporting, the Office of County Finance and Technical Assistance coordinated the filing of the reports for the subsidy payments processed through the County Finance Information System Web (CFIS), which makes up approximately 90% of the subaward reporting. The Senior Fiscal Analyst runs a report in Ohio Administrative Knowledge System (OAKS) Business Intelligence (BI) that lists all the grant distributions from the previous month, compares the report to the CFIS system, and then enters the information into the FSRS website. For contracts and state subaward reporting, the Office of Contracts and Acquisitions runs a report from OAKS BI that lists all contracts and acquisitions the Department entered in the prior month. The Senior Financial Analyst then reviews the listing and contacts the various program areas to determine the information to be reported on the FSRS website. Supervisory meetings are held weekly to ensure the accuracy of the information reported. However, the Department?s internal controls were not operating effectively. As a result, the following errors were noted: WIOA Cluster Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 0 2 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $1,642,493 $0 $938,321 $0 $0 TANF Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 2 5 3 2 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $18,178,420 $650,000 $11,380,124 $675,000 $650,000 Foster Care ? Title IV-E Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 9 4 7 7 4 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $2,648,572 $2,122,288 $2,608,864 $2,590,413 $2,122,288 Adoption Assistance Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 8 0 1 0 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $466,253 $0 $146,489 $0 $0 Social Services Block Grant Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 25 0 4 2 0 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $8,148,426 $0 $431,539 $4,309 $0 A lack of effective internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these issues were caused by oversight and information not being compiled timely for submission. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. Auditor of State Conclusion: The response to this finding included in the State of Ohio Corrective Action Plan indicated they disagreed with the portion of errors related to county subrecipients and required an Auditor of State Conclusion. The County errors identified relate to the Foster Care program (two subawards not reported/reported untimely) and the SSBG and TANF programs (two and three subawards reported untimely, respectively). For the non-reported subawards, per 2 C.F.R. ? 25.300, a recipient may not make a subaward to a subrecipient unless that subrecipient has obtained and provided to the recipient a unique entity identifier. Furthermore, the client did not provide supporting documentation to show the award information was entered into FSRS at a later time. For the late subawards, the submission information contained within FSRS showed the information was not submitted/reported by the client in a timely manner and the client could not provide any additional supporting documentation to validate the reporting information was entered by the established due date. Therefore, the finding will remain as stated above.
VARIOUS PROGRAMS ? SUBRECIPIENT MONITORING Finding Number: 2022-020 State Agency Number: MHA-01 Assistance Listing Numbers and Titles: 93.667 ?- Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-022 NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ?75.352 states, in part: All pass-through entities must: . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section? (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity; (2) 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 (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 75.521. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing on-site reviews of the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in ? 75.425. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are in compliance with laws and regulations. In addition, sound internal control procedures require management to monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year (SFY) 2022, the Department disbursed approximately $122.8 million to subrecipients of the SSBG, Opioid STR, and MHBG programs, as follows: Assistance Listing Number & Title Disbursements to Subrecipients Number of Subrecipients 93.667 ?- SSBG $6,741,813 50* 93.788 ? Opioid STR $87,873,804 189* 93.958 ? MHBG $28,199,223 134* Combined Total: $122,814,840 ? Includes 50 Alcohol, Drug Addiction, and Mental Health (ADAMH) boards The Department?s Community Monitoring Section (CMS) deploys a risk management monitoring technique for subrecipient monitoring to analyze and evaluate vulnerabilities of federal awards provided to the ADAMH boards. At the beginning of each fiscal year, CMS sends out questionnaires to all 50 ADAMH boards soliciting feedback regarding financial reporting, organizational turnover, number of contracted agencies, and whether any other monitoring (i.e., financial audits, peer review) has been completed. The Department then compiles the Consolidated Unexpended Funds spreadsheet based on financial data obtained from the questionnaires, including any variances in financial data and unexpended federal funds. The CMS Manager then utilizes the Consolidated Unexpended Funds spreadsheet to determine how to manage the State-wide risk and instructs CMS staff how to deploy its monitoring efforts for the SFY. Annually, CMS is to conduct Single Audit report reviews to ensure subrecipients, who have received at least $750,000 in federal funding for the fiscal year, have complied with the requirements for federal awards passed through the Department and make management decisions on any audit findings/corrective action plans within six months of the audit report date. The Department utilizes a database/Audit Review Tracking Spreadsheet to track data on subrecipients, such as: desk reviews, single audit reviews, subrecipient financial information, amounts subrecipients reported on their Schedule of Expenditures of Federal Awards, financial information from the State?s accounting system, and any other information about the subrecipient that would assist in effectively managing State-wide concerns on the federal awards passed through the Department. The Department reviews the Single Audits completed and the Corrective Action Plan (CAP), if applicable, for subrecipients with findings and issues a Management Decision letter to the subrecipient within six months of the audit report date. During the risk management process, CMS evaluates the rotation cycle, questionnaire results, and Board Risk Scores and identifies the Boards for which it will conduct the Stakeholder Assistance Review (SAR) procedures. The Department has designated the SAR process as an increased monitoring technique which is only applied to specific Boards designated as higher risk where the Department will conduct a physical on-site and/or virtual visit during the SFY. The SAR process is performed on a rotation basis to obtain approximately 33% or more coverage of all boards per Department policy. During SFY 2022, the Department performed risk management reviews, on-site reviews, and single audit reviews of the ADAMH boards; however, the following issues were identified: ? The Department did not have procedures in place to monitor Opioid STR and MHBG subrecipients, other than the 50 ADAMH boards. As a result, the Department did not monitor 139 of 189 (73.5%) Opioid STR subrecipients which received $94.1 million, and 84 of 134 (62.7%) MHBG subrecipients which received $23.4 million during the audit period as required by 45 C.F.R. ?75.352 (d). ? For three of three (100%) audit reports selected for testing, the Department did not complete or provide the management decision letters to the subrecipients. As such, the Department did not issue a management decision (within six months of the report being accepted), as required by 45 C.F.R. ?75.352 (d)(3). ? The Department did not complete 16 of 17 (94.1%) planned SAR on-site/virtual visits during the audit period. Without adequate procedures in place to monitor subrecipient compliance with federal statutes, laws and regulations, there is an increased risk subrecipients may misuse federal funds for unauthorized purposes. This could lead to fines, penalties, or repayment of program funds being imposed by the federal grantor agency. Based on discussions with management, the lack of subrecipient monitoring and documentation was caused by employee turnover, new management, and oversight. We recommend the Department evaluate its current control procedures and processes over subrecipient monitoring and update them as necessary to reasonably ensure compliance with 45 C.F.R. ?75.352. These procedures should include risk management monitoring, increased and SAR desk reviews, and Single Audit reviews. Additionally, the Department should ensure an appropriate level of coverage is obtained for each federal program based on major program testing within the Single Audits. The Department should also put monitoring procedures in place over all subrecipients and not just the 50 ADAMH boards. Management should periodically monitor these procedures to ensure they are operating effectively and as intended.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-022 State Agency Number: MHA-03 Assistance Listing Numbers and Titles: 93.667 ? Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Block Grants for Community Mental Health Services (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-023 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $123.6 million for 329 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 93.667 SSBG 50 $6,690,064 93.788 Opioid STR 184 $94,056,082 93.958 MHBG 95 $22,856,777 Monthly, the Department?s Fiscal Office is to generate the Transparency Act report from the Grants Funding Management System (GFMS) and review it for completeness and accuracy, then approve it in the GFMS system. The Transparency Act report is then manually entered or uploaded into the FSRS website. However, there is no supervisory review of the report prior to submission to the FSRS website and the controls were not operating effectively during the audit period. As a result, the Department did not submit 311 of 329 (94.5%) subawards within the FSRS website for the SSBG, Opioid STR, and MHBG programs during state fiscal year 2022 as detailed below, per program: SSBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 50 50 50 50 50 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,690,064 $6,690,064 $6,690,064 $6,690,064 $6,690,064 Opioid STR Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 172 172 172 172 172 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $90,965,560 $90,965,560 $90,965,560 $90,965,560 $90,965,560 MHBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 89 89 89 89 89 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $21,818,231 $21,818,231 $21,818,231 $21,818,231 $21,818,231 By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within the FSRS website, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these errors were caused by management and employee turnover and internal system issues to comply with the Transparency Act report format. We recommend the Department collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include a supervisory review of the report information before it is submitted on the FSRS website.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
IT ? MEDICAID/CHIP/SNAP/TANF ? OHIO BENEFITS SYSTEM Finding Number: 2022-001 State Agency Number: DAS-01 Assistance Listing Numbers and Titles: 10.551/10.561 ? SNAP Cluster 93.558 ? Temporary Assistance for Needy Families (TANF) 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number/Year: 202OH102S2514 / 2020 (SNAP Cluster) 202OH102S6018 / 2020 (SNAP Cluster) 212OH102S2514 / 2021 (SNAP Cluster) 212OH102S6018 / 2021 (SNAP Cluster) 222OH102S2514 / 2021 (SNAP Cluster) 222OH102S6018 / 2021 (SNAP Cluster) 1901OHTANF / 2019 (TANF) 2001OHTANF / 2020 (TANF) 2101OHTANF / 2021 (TANF) 2201OHTANF / 2021 (TANF) 2005OH5021 / 2020 (CHIP) 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2005OH5MAP / 2020 (Medicaid) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agencies: Department of Agriculture Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility, Special Tests & Provisions ? Income Eligibility Verification System Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-002 MATERIAL WEAKNESS NOTE: Finding numbers 2022-013, 2022-017, 2022-018, and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. Applications/systems must be properly designed to achieve the business and IT goals of the organization. External factors effecting eligibility must be appropriately considered and properly evaluated to ensure eligibility for benefits is properly determined, and appropriate updates to eligibility are made when applicable. It is critical the appropriate monitoring controls are designed and implemented to reasonably ensure the organization has adequate controls to achieve management?s goals and objectives. During state fiscal year (SFY) 2022, the State of Ohio disbursed a combined total of $33.2 billion in public assistance payments related to the following programs: Assistance Listing Number & Title Benefits Paid Number of Recipients* 93.767 - CHIP $667,281,191 222,243 93.775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 10.551/10.561 ? SNAP Cluster $4,465,389,555 1,502,137 93.558 ? TANF $203,674,740 73,104 Combined Total $ 33,220,046,930 4,763,007 *We did not separately identify recipients who could be covered by multiple programs The State of Ohio uses a multi-agency approach to administer these programs, as follows: overall compliance and administration of the Medicaid Cluster and CHIP falls under the Ohio Department of Medicaid (MCD), overall compliance and administration of the SNAP Cluster and TANF programs falls under the Ohio Department of Job & Family Services (ODJFS), and programming and administration of the State?s eligibility determination computer system, Ohio Benefits (OB), falls under the Ohio Department of Administrative Services (DAS). The OB system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (SSA, Internal Revenue Service (IRS), etc.). The State also utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the State?s system, and follow up on alerts issued by the system. Currently, individuals applying to receive public assistance benefits complete an application through one of several input locations including the Ohio Benefits Self-Service Portal, the Federally Funded Marketplace, Social Security, County Departments of Job & Family Services (CDJFS) offices; the Medicaid Consumer Hotline (the Hotline starts the application and sends to the CDJFS to complete); and paper applications that are sent to the CDJFS. When applying, the CDJFS collects and maintains any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS. After collecting documentation, the county caseworker enters the individual?s information into the OB system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. The OB system is programmed with the State Plan recipient eligibility requirements to determine whether the recipient is eligible to receive the related program benefits based on the information entered by the recipient or caseworker and also assigns a benefit aid category. Once the determination is made, the OB system uploads the eligibility information to the MCD or ODJFS payment system for processing. The OB system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses in the design and monitoring of the OB system: ? Alerts ? During SFY 2022, more than 15.5 million alerts were issued for all public assistance programs according to DAS records (more than 3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with the personnel from DAS, MCD, and ODJFS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. To remedy this volume of alerts, DAS has prioritized delivery of two additional enhancements targeted to be delivered in early SFY 2023 which are expected to decrease the overall backlog and reduce the incoming new alerts. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for OB. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. If the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility, the risk of inaccurate or unallowable benefits being paid to, or on behalf of, recipients is greatly increased. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the State to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Additionally, without signed agreements with related agencies there is an increased risk responsibilities of each party may not be clearly defined, creating delays in critical processing and jeopardizing the achievement of overall goals. Also, without a data governance structure in place, there is an increased risk that management may rely on data that is of poor quality and/or unreliable. Based on discussions with management, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. Management indicated the Ohio Benefits Program Team met with county caseworkers and CDJFS representatives in the Autumn of 2022 to specifically define and design a solution to reduce matches (and therefore alerts) to make IRS IEVS matches quicker and easier to process. The planned delivery towards these concerns with Release 4.6.1 is set for April 2023. Management also indicated the interagency agreements were drafted in June 2022 and are currently under final legal review at all three agencies. In addition, due to time constraints and other higher-level priorities, a data governance structure had not been formalized for the Ohio Benefits Program data. An Ohio Benefits Data Governance Team was formed and began meeting in September 2022 and is working towards formalizing their data governance structure and identifying goals and objectives. We recommend DAS continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the eligibility/IEVS process within the OB system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to analyze and prioritize items requiring follow-up. This would allow related state agency level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both related state agency and county personnel. ? Identifying and coordinating program changes to address the system design weaknesses identified above. This should include working collaboratively with the related state agencies to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should ensure data subject experts from each related agency are included to help ensure the quality of data requests before external and internal users place reliance on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established.
MEDICAID/CHIP ? ELIGIBILITY Finding Number: 2022-018 State Agency Number: MCD-01 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID 19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID 19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirements: Activities Allowed or Unallowed, Allowable Costs/Cost Principles, Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-019 QUESTIONED COSTS, NONCOMPLIANCE, AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-019 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.10, State Plan requirements, pertaining to the Medicaid Cluster states, in part A State plan must--- (a) Provide that the requirements of this part are met; and (b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups. . . 42 C.F.R. ? 435.914, Case documentation, pertaining to the Medicaid Cluster states, in part: (a) The agency must include in each applicant's case record facts to support the agency's decision on his application. . . 42 C.F.R. ? 433.400, pertaining to continued enrollment during the public health emergency states, in part: . . . (b) Definitions Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last determination was completed prior to March 18, 2020) because of agency error or fraud. . . or abuse . . . (c) General Requirements (2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits . . as of or after March 18, 2020, the state must maintain the beneficiary?s enrollment . . . through the end of the month in which the public health emergency for COVID-19 ends. (i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC (Minimum Essential Coverage) . . . as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC . . . (d) Exceptions (1) . . . a state may terminate a beneficiary?s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances: (i) The beneficiary or beneficiary?s representative requests a voluntary termination of eligibility; (ii) The beneficiary ceases to be a resident of the state; or (iii) The beneficiary dies 42 U.S.C. ? 1397bb (b), pertaining to the Children?s Health Insurance Program (CHIP) states, in part: (1) Eligibility Standards (A) The plan shall include a description of the standards used to determine the eligibility of targeted low-income children for child health assistance under the plan. . . Ohio Admin. Code 5160-26-02.1 states, in part: . . . (B) The Ohio department of Medicaid (ODM) will terminate a member from enrollment in a managed care organization for any of the following reasons: . . . (3) The member dies, in which case MCO enrollment ends on the date of death (C) All of the following apply when enrollment is terminated for any of the reasons set forth in paragraph (B) of this rule: . . . (5) ODM shall recover from the MCO any capitation paid for retroactive enrollment termination occurring as a result of paragraph (B) of this rule. The Medicaid and CHIP State Plan outlines the specific eligibility conditions and standards within Sections 2.2 ? Coverage and Conditions of Eligibility and 2.6 A ? Financial Eligibility, Eligibility Conditions and Requirements for Medicaid and Section 4 ? Eligibility Standards and Methodology for CHIP. During the Public Health Emergency (PHE), the Department issued several Medicaid Eligibility Procedure Letters (MEPLs) to Medicaid personnel, including county caseworkers, on how to address the federal rule changes put into place during the PHE. One such MEPL gave guidance on acceptable and nonacceptable transitions of benefit aid categories to maintain MEC, as described in 42 C.F.R. ? 433.400. It is management?s responsibility to implement policies and procedures to provide reasonable assurance they have complied with these requirements. As the lead agency responsible for administering the CHIP and Medicaid federal grant awards for the State of Ohio, the Department is responsible for providing reasonable assurance only eligible individuals receive assistance and documentation maintained is accurate, complete, and properly recorded in the Ohio Benefits system to ensure appropriate eligibility determinations. It is also the Department?s responsibility to implement sufficient controls, systems, processes, and procedures to reasonably ensure compliance with the rules and regulations associated with these programs and only eligible recipients receive benefits. The Department is responsible for overall program compliance and must have appropriate oversight and monitoring procedures in place to ensure those they rely on are operating in accordance with all expectations, guidelines, and requirements related to their tasks. During state fiscal year (SFY) 2022, the Department disbursed a combined total of $28.5 billion in public assistance payments to recipients processed through the Ohio Benefits system related to the following programs: Assistance Listing Number & Title Benefits Paid # of Recipients* 93.767 - CHIP $667,281,191 222,243 93.7775/93.777/93.778 ? Medicaid Cluster $27,883,701,444 2,965,523 Combined Total $28,550,982,635 3,187,766 *We did not separately identify recipients who could be covered under both programs. These programs are administered using a multi-agency approach, as follows: overall compliance and administration of CHIP and the Medicaid Cluster fall under the Department, and programming and administration of the State?s eligibility determination computer system, Ohio Benefits, falls under the Ohio Department of Administrative Services (DAS). The Ohio Benefits system contains the eligibility and benefit information/determinations for these programs, including the Income Eligibility Verification System (IEVS) functionality which compares reported recipient income to income information maintained by outside data sources (Social Security Administration (SSA), Internal Revenue Services (IRS), etc.). The Department also, through a Memorandum of Understanding with the Ohio Department of Job & Family Services (JFS), utilizes the 88 Ohio counties in the eligibility determination process to work with applicants, receive/enter eligibility documentation into the Ohio Benefits system, and follow up on alerts issued by the system. SYSTEM/CONTROL ISSUES Currently, individuals applying to receive public assistance benefits complete an application through various methods. The County Departments of Job & Family Services (CDJFS) collect and maintain any documentation provided by the individual either in a paper case file or in the OnBase Enterprise Documentation Management System (EDMS) maintained under contract by DAS and utilized by the Department. After collecting documentation, the county caseworker enters the individual?s information into the Ohio Benefits system which determines the initial eligibility benefit amount and assigns the benefit aid category, where applicable. This process is also used to perform eligibility redeterminations on an annual basis or when prompted through a system alert. Once the determination is made, the Ohio Benefits system uploads the eligibility information to the Department?s payment system, Medicaid Information Technology System (MITS), to process the payment. The Ohio Benefits system is designed to issue alerts to county caseworkers for a variety of items which require review, evaluation, follow-up, and a determination about the impact on the related case and/or program benefits. However, we noted the following weaknesses/defects in the eligibility process: ? Alerts ?During SFY 2022, more than 15.5 million alerts were issued related to all public assistance programs that utilize Ohio Benefits, including the CHIP and Medicaid Cluster programs, according to DAS records (3.4 million IEVS alerts and 12.1 million non-IEVS alerts). Ongoing enhancements to the Ohio Benefits alerts process were made in coordination with personnel from the Department, JFS, and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts/matches issued remained high: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. ? Caseworker Reliance/Training - The current process relies heavily on the knowledge and judgement of county caseworkers in the eligibility process. While statewide trainings and individual trainings for counties to assist them in working IEVS alerts continues, system enhancements have not fully addressed the issue of excessive alerts. Additionally, these trainings are typically optional and/or attended by a representative of the county who is expected to relay the information to others. We also noted the following weaknesses/issues related to the Ohio Benefits system in Finding Number 2022-001 for DAS. ? Contract and Monitoring ? Although operating protocols were available defining DAS? responsibilities, a signed interagency agreement has not been finalized to define the roles and responsibilities of each agency and naming DAS as the administrator for Ohio Benefits. ? Data Governance ? No data governance structure was in place to ensure reliability over the data for management. Therefore, it was not clear how program objectives were being met/monitored and how program compliance was being achieved. NONCOMPLIANCE ISSUES The following noncompliance was noted related to eligibility for the Medicaid and CHIP programs, which included questioned costs for Medicaid totaling $34,781 and CHIP totaling $410,211: ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not eligible to receive benefits on the date services were performed as they were not validly enrolled beneficiaries based on information in Ohio Benefits, the State?s official eligibility determination system. Therefore, these items will result in questioned costs for all claims paid for services provided for these individuals during the time they were ineligible, totaling $34,781 for Medicaid and $410,211 for CHIP. The items noted included issues such as: o The recipient failed to timely report an increase in income and/or new employment. o The caseworker failed to timely update Ohio Benefits with an increase in income. o U.S. Citizenship was not properly verified. o The recipient was covered by other health insurance. o The recipient was not a resident of Ohio at the time benefits were paid. o Assets were not properly accounted by the caseworker when determining eligibility. ? Three of 80 (3.8%) Medicaid recipients and eight of 80 (10%) CHIP recipients selected for testing were not placed in the correct benefit aid category. All the Medicaid and CHIP recipients were included in the preceding bullet as being deemed ineligible. ADDITIONAL QUESTIONED COSTS: In January 2022, the Auditor of State?s Medicaid Contract Audit (MCA) section released a Public Interest Report regarding Improper Capitation Payments to managed care providers covering SFY 2018 through SFY 2020 for the Medicaid program. The objectives were to identify duplicate payments for recipients, payments for individuals not eligible for managed care due to their incarceration, and payments for recipients in the months following their death. Utilizing the results from the MCA report, we performed additional procedures, specifically focused on duplicate recipient payments and payments made after a recipient?s death, to see if these issues continued during our audit period and if additional payments were made on behalf of these individuals during SFY 2022 from the Medicaid and CHIP programs. We noted the following: ? The Department made 605 payments, totaling $304,610, on behalf of 97 Medicaid recipients where a Social Security Number was associated with multiple recipient IDs within MITS. This amount includes both the allowable payments and the unallowable duplicate payments and represents the entire payment for the recipient, not only the federal share of the payment. We selected 25 of the 97 Medicaid recipients for further testing to determine if the Department took appropriate action to identify and recover the duplicate payments. Five of 25 (20%) Medicaid recipients tested did not appear to include any recovery efforts related to the duplicate payment made on their behalf, totaling $4,082. However, without reviewing the support within each individual case file, we were unable to identify exactly how much was improperly paid. Due to this fact, these errors were not the result of a representative sample of the population, the errors were not projected to the population. As a result, we will question costs for these payments, totaling $4,082 for the Medicaid program. ? Per Ohio Admin. Code ? 5160-26-02.1, the Department will terminate a member?s enrollment in manage care upon the date of death. The Department shall recover from the Managed Care Organization any capitation payments paid for retroactive enrollment termination. The Department can become aware of a recipient?s death through various means. The managed care provider agreement requires the Managed Care Organization to notify the Department when it becomes aware of a recipient?s death. The recipient?s death may also be reported to the County caseworkers by a family member, other adults on the same case, caregivers, or facilities. The Ohio Benefits system is designed to generate alerts to notify the County caseworkers of a deceased match. The Department has 10 calendar days to process a re-determination when a change has been reported that could affect a recipient?s ongoing eligibility. When the Department has been notified of a potential death of a recipient, the recipient is to be removed from managed care and placed in fee for service until confirmation of the death is received. The Department made 651 payments, totaling $617,207, on behalf of 88 deceased individuals receiving Medicaid benefits. We selected 25 of the 88 deceased individuals for further testing to determine if the Department took appropriate action to identify and recover the payments. Nine of 25 (36%) Medicaid recipients tested had an unallowable capitation payment made on behalf of these deceased individuals which was not recovered by the Department, resulting in questioned costs, totaling $142,445. We also noted the following regarding these nine recipients: o Capitation payments were made on behalf of eight recipients for all 12 months of the audit period. o The caseworker obtained the necessary verification for one recipient?s death and ran the Eligibility Determination Benefit Calculator in May 2020 to discontinue Medicaid benefits. However, capitation payments were made on behalf of this recipient for six months of the audit period. o The system indicated caseworkers sent death inquiries to family members, caretakers, and/or facilities in December 2021 to verify the date of death for five recipients (date of deaths ranged from November 2018 ? April 2020). However, no responses were received, and no further follow-up actions were taken. o The Department started the recoupment process for one of the recipients; the questioned costs above include only the outstanding amount. The items noted above under Noncompliance and Additional Questioned Costs resulted in questioned costs for both the Medicaid Cluster and CHIP, as summarized in the table below: Summary of Questioned Costs by Category Medicaid Cluster CHIP Ineligible Recipients $34,781 $410,211 Duplicate Managed Care Payments 4,082 0 Managed Care Payments for Deceased Individuals 142,445 0 Total Questioned Costs: $181,308 $410,211 Without proper controls for entering, processing, and maintaining recipient information and correcting system alerts and weaknesses, there is an increased risk that benefits paid to or on behalf of recipients will be inaccurate or unallowable. This risk is substantially increased if the State?s eligibility determination system, Ohio Benefits, is not designed to properly identify changes to recipient information and generate relevant alerts when those changes could impact a recipient?s eligibility. These weaknesses could allow undue subjective decisions, jeopardize accurate eligibility processing, and/or result in improper payments or federal reimbursements. Overpayments or payments to or on behalf of ineligible recipients may subject the Department to penalties or sanctions which may jeopardize future funding and limit its ability to fulfill program requirements to provide benefits to those in need. Based on discussions with management, oversight and systemic issues led to the issues identified. Additionally, the Ohio Benefits filtering logic was not working as intended upon receipt of the interface file from the IRS creating duplicate alerts; therefore, sending a high volume of alerts to county caseworkers. In addition to staffing issues at the counties, this high volume of alerts created an unmanageable number of alerts to be worked timely. Throughout the audit period, several enhancements were made to the Ohio Benefits system that reduced the number of alerts sent to county caseworkers and a solution to reduce the IRS matches/alerts is scheduled for release in April 2023. RECOMMENDATIONS We recommend the Department evaluate and seek reimbursement for all claims that were incorrectly paid. We also recommend management continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system programming to address the weaknesses in the overall eligibility process, including those associated with the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Continuing to redesign the alert process to be more effective and efficient. This could include a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Requiring mandatory training for all CDJFS employees who are entering the assistance group information into Ohio Benefits to help ensure proper and complete information is being collected, entered, and verified prior to an individual?s eligibility determination being made. This training should continue to be provided initially to ensure all users are knowledgeable of the process, procedures, and impacts of the work they do. As changes occur to the rules/regulations, system, or process, detailed training should be required of all users on those changes. ? Regularly evaluating selected benefit payments for all programs to verify the recipient?s eligibility, verify the recipient information entered into Ohio Benefits by the CDJFS is accurate and the information is being maintained to support the State?s eligibility decision, and ensure initial eligibility determinations and redeterminations are completed timely. Any problems noted should be promptly corrected to reduce the risk of benefit payments being made to or on behalf of ineligible individuals and additional training provided to the State and/or county employees affected. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. ? Ensuring interagency agreements are formalized, contain all parties of the agreements, and fully and clearly define the roles, responsibilities, and expectations related to each party, including completion of required risk assessments and evaluations, and any other specific tasks designed to achieve program compliance. ? Implementing a data governance structure designed to ensure data quality and reliability for management, the grantor agencies, and other users of this information. This structure should include data subject experts from each related agency to help ensure quality of data requests before external and internal users rely on the data, issues are addressed with a clear escalation path, and accountability and alignment between the related agencies is established. ? Evaluating current processes for identifying duplicate recipient IDs and deceased individuals and updating Ohio Benefits and MITS in a timely manner. Controls should be implemented to ensure caseworkers are following up on the Social Security Administration, Ohio Department of Health, or other death indicators in a timely manner. This should include developing a process for confirming an individual?s death if the family member, caretaker, or facility is not responding to the caseworkers and ensuring the recipient is disenrolled from the managed care plan and converted to fee for services until date of death is confirmed.
MEDICAID/CHIP ? IEVS ALERTS Finding Number: 2022-019 State Agency Number: MCD-02 Assistance Listing Numbers and Titles: 93.767 ? Children?s Health Insurance Program (CHIP) 93.767 COVID-19 ? CHIP 93.775/93.777/93.778 ? Medicaid Cluster 93.775/93.777/93.778 COVID-19 ? Medicaid Cluster Federal Award Identification Number / Year: 2105OH5021 / 2021 (CHIP) 2205OH5021 / 2022 (CHIP) 2105OH5MAP / 2021 (Medicaid) 2205OH5MAP / 2022 (Medicaid) Federal Agency: Department of Health and Human Services Compliance Requirement: Eligibility Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-020 NONCOMPLIANCE AND MATERIAL WEAKNESS NOTE: Finding numbers 2022-001 and 2022-018 contain additional information which is integral to and should be read in conjunction with this finding. 42 C.F.R. ? 435.945 states, in part, the following regarding the Medicaid Cluster program: (a) Except where the law requires other procedures . . . the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid . . . without requiring further information (including documentation) from the individual. (b) The agency must request and use information relevant to verifying an individual's eligibility for Medicaid in accordance with ? 435.948 through 435.956 . . . 42 C.F.R. ? 457.380, states, in part, the following regarding the Children?s Health Insurance Program (CHIP): (a) General requirements. Except where law requires other procedures . . . the State may accept attestation of information needed to determine the eligibility of an individual for CHIP. . . without requiring further information (including documentation) from the individual. (b) Status as a citizen, national or a non-citizen. (1) Except for newborns identified in ? 435.406(a)(1)(iii)(E) of this chapter, who are exempt from any requirement to verify citizenship, the agency must? . . . (ii) Provide a reasonable opportunity period to verify such status in accordance with ? 435.956(a)(5) and (b) of this chapter and provide benefits during such reasonable opportunity period to individuals determined to be otherwise eligible for CHIP. Furthermore, 42 U.S.C. ? 1320b?7(a) Requirements of State eligibility systems states, in part: In order to meet the requirements of this section, a State must have in effect an income and eligibility verification system which meets the requirements of subsection (d) and under which? (1) the State shall require, as a condition of eligibility for benefits under any program listed in subsection (b), that each applicant for or recipient of benefits under that program furnish to the State his social security account number (or numbers, if he has more than one such number), and the State shall utilize such account numbers in the administration of that program so as to enable the association of the records pertaining to the applicant or recipient with his account number; (2) wage information from agencies administering State unemployment compensation laws available pursuant to section 3304(a)(16) of the Internal Revenue Code of 1986, wage information reported pursuant to paragraph (3) of this subsection, and wage, income, and other information from the Social Security Administration and the Internal Revenue Service available pursuant to section 6103(l)(7) of such Code, shall be requested and utilized to the extent that such information may be useful in verifying eligibility for, and the amount of, benefits available under any program listed in subsection (b), as determined by the Secretary of Health and Human Services . . . . . . (4) the State agencies administering the programs . . . adhere to standardized formats and procedures . . . under which ? (A) the agencies will exchange with each other information in their possession which may be of use in establishing or verifying eligibility or benefit amounts under any other such program . . . (C) the use of such information shall be targeted to those uses which are most likely to be productive in identifying and preventing ineligibility and incorrect payments. . . In order to comply with 42 C.F.R. ? 435.945 and 42 U.S.C. ? 1320b-7, the State of Ohio codified specific rules related to its Income Eligibility Verification System (IEVS) in the Ohio Administrative Code. Ohio Admin. Code 5160:1-1-04 states, in part: (A) This rule describes the requirements in section 1137 of the Social Security Act and in section 42 C.F.R. 435.945. . ., requiring state agencies administering certain federally funded, state administered public assistance programs, to establish procedures for obtaining, using and verifying information relevant to determinations of eligibility. The Ohio department of medicaid shall obtain and share income and benefit information with the following sources: (1) The social security administration (SSA). (2) The internal revenue service (IRS). (3) The state wage information collection agency (SWICA). (4) The agencies administering the State unemployment compensation (UC) laws. . . . (C) Administrative agency responsibilities. Within forty-five days of receipt of the information, the administrative agency shall initiate, pursue, and complete the actions specified. . .: . . . (3) Review and compare against the case record all information received from the IEVS data matches to determine whether the information affects the individual's eligibility, in accordance with 42 C.F.R. 435.948. (4) Obtain additional information or documentation from the individual, if needed, to determine eligibility and initiate appropriate action in accordance with 42 C.F.R. 435.952(c). (5) . . . The administrative agency shall verify information. . . (6) Update case information and redetermine eligibility when the verification received is discrepant from information currently listed in the electronic eligibility system. It is management?s responsibility to implement controls, processes, and procedures to ensure compliance with these regulations. When automated systems are utilized to perform certain functions related to this compliance, management must ensure the system is properly designed and operating effectively. During state fiscal year (SFY) 2022, the Department disbursed approximately $27.8 billion and $667.2 million on behalf of recipients who were determined eligible for the Medicaid Cluster and CHIP programs, respectively. The Ohio Benefits (OB) system, administered by the Ohio Department of Administrative Services (DAS), determines eligibility for the Medicaid Cluster and CHIP programs. The OB system also includes the IEVS functionality which compares income, as reported by recipients, to income information maintained by outside sources (i.e. Social Security Administration (SSA), Internal Revenue Service (IRS), etc.). Income information that does not agree to the OB amount is communicated as an IEVS alert and forwarded to the appropriate county for investigation and resolution. Each alert has a defined due date, which is unique based on the priority level and other policy and process related factors. During SFY 2022, more than 15.5 million alerts were issued (3.4 million IEVS alerts and 12.1 million non-IEVS alerts) for all public assistance programs that utilize OB, including the Medicaid and CHIP programs. Alerts can be generated by Ohio Benefits via interface outputs/updates, batch outputs or other triggers within the system. Ongoing enhancements to the OB alerts process were made in coordination with personnel from the Department, the Ohio Department of Job and Family Services (JFS), and DAS throughout the audit period. These enhancements addressed design weaknesses to work on solutions for filtering duplicate alerts, including those across multiple programs. However, the volume of incoming IRS alerts issued remained slightly higher: these alerts affect a change in recipient income and could possibly have an impact on eligibility or the benefit amount. These design weaknesses created a large volume of information being sent to the counties, resulting in an increased workload and ineffective application of the alert process. In addition, the Department relies heavily on JFS to coordinate with and provide training to the counties; however, these trainings were not required to be attended by all county caseworkers. See findings 2022-001 and 2022-018 for more detailed information regarding the OB weaknesses and defects, as well as the training control weaknesses. Furthermore, an OB data file containing IEVS alerts showed 1,268,042 of 2,169,386 (58.5%) IEVS alerts sent to the counties during the audit period were not cleared within 45 days, as required. The alerts were cleared between one and 416 days beyond the 45-day requirement, with an average of 209 days late. Failure to correct system design weaknesses, perform monitoring activities, mandate training for county caseworkers, and complete IEVS alerts within the established timeframe increases the risk benefits given to ineligible recipients or for inappropriate amounts will not be identified timely. This condition could adversely affect the Department?s ability to comply with IEVS requirements for these federal programs which could result in federal sanctions or penalties. Based on discussions with management, the high volume of alert generation likely caused the timeliness issues. Management indicated they continue to work with JFS and DAS to enhance the statewide eligibility system to reduce the high volume of alerts. We recommend the Department continue to work collectively with the related state agencies to implement/update robust processes, procedures, and system controls to address the weaknesses associated with the IEVS process within the Ohio Benefits system. These changes/updates should include, but not be limited to: ? Including a more centralized evaluation of alert activity and/or better use of automated tools to vet and prioritize items requiring follow-up at the county level. This would allow Department level personnel to become more experienced and adept at identifying and investigating anomalies and help focus the resources of both Department and county personnel. ? Monitoring the IEVS alert processing procedures guide for the alerts issued by the Ohio Benefits system to ensure alerts are properly documented within the system, worked within the proper time frames, and proper verification documentation is obtained and maintained by the counties for resolved alerts. ? Determining if the IEVS training for county caseworkers is working as intended to ensure they have the knowledge to properly document and resolve IEVS alerts generated by the Ohio Benefits system and making any necessary updates/changes. ? Identifying and coordinating Ohio Benefits program changes to address the system design weaknesses identified above. This should include working collaboratively with DAS to prioritize program changes which could directly impact the eligibility determinations or benefit amounts to ensure they are corrected in a timely manner to prevent and detect further improper payments. In addition, the Department should evaluate these enhancements to assist DAS in determining if the desired outcome was achieved. We also recommend the Department continue to monitor the status of system enhancements and roll-out of resources to the appropriate personnel to ensure they are implemented timely and as planned.
VARIOUS PROGRAMS ? SUBRECIPIENT MONITORING Finding Number: 2022-020 State Agency Number: MHA-01 Assistance Listing Numbers and Titles: 93.667 ?- Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-022 NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ?75.352 states, in part: All pass-through entities must: . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section? (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity; (2) 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 (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 75.521. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing on-site reviews of the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in ? 75.425. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are in compliance with laws and regulations. In addition, sound internal control procedures require management to monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year (SFY) 2022, the Department disbursed approximately $122.8 million to subrecipients of the SSBG, Opioid STR, and MHBG programs, as follows: Assistance Listing Number & Title Disbursements to Subrecipients Number of Subrecipients 93.667 ?- SSBG $6,741,813 50* 93.788 ? Opioid STR $87,873,804 189* 93.958 ? MHBG $28,199,223 134* Combined Total: $122,814,840 ? Includes 50 Alcohol, Drug Addiction, and Mental Health (ADAMH) boards The Department?s Community Monitoring Section (CMS) deploys a risk management monitoring technique for subrecipient monitoring to analyze and evaluate vulnerabilities of federal awards provided to the ADAMH boards. At the beginning of each fiscal year, CMS sends out questionnaires to all 50 ADAMH boards soliciting feedback regarding financial reporting, organizational turnover, number of contracted agencies, and whether any other monitoring (i.e., financial audits, peer review) has been completed. The Department then compiles the Consolidated Unexpended Funds spreadsheet based on financial data obtained from the questionnaires, including any variances in financial data and unexpended federal funds. The CMS Manager then utilizes the Consolidated Unexpended Funds spreadsheet to determine how to manage the State-wide risk and instructs CMS staff how to deploy its monitoring efforts for the SFY. Annually, CMS is to conduct Single Audit report reviews to ensure subrecipients, who have received at least $750,000 in federal funding for the fiscal year, have complied with the requirements for federal awards passed through the Department and make management decisions on any audit findings/corrective action plans within six months of the audit report date. The Department utilizes a database/Audit Review Tracking Spreadsheet to track data on subrecipients, such as: desk reviews, single audit reviews, subrecipient financial information, amounts subrecipients reported on their Schedule of Expenditures of Federal Awards, financial information from the State?s accounting system, and any other information about the subrecipient that would assist in effectively managing State-wide concerns on the federal awards passed through the Department. The Department reviews the Single Audits completed and the Corrective Action Plan (CAP), if applicable, for subrecipients with findings and issues a Management Decision letter to the subrecipient within six months of the audit report date. During the risk management process, CMS evaluates the rotation cycle, questionnaire results, and Board Risk Scores and identifies the Boards for which it will conduct the Stakeholder Assistance Review (SAR) procedures. The Department has designated the SAR process as an increased monitoring technique which is only applied to specific Boards designated as higher risk where the Department will conduct a physical on-site and/or virtual visit during the SFY. The SAR process is performed on a rotation basis to obtain approximately 33% or more coverage of all boards per Department policy. During SFY 2022, the Department performed risk management reviews, on-site reviews, and single audit reviews of the ADAMH boards; however, the following issues were identified: ? The Department did not have procedures in place to monitor Opioid STR and MHBG subrecipients, other than the 50 ADAMH boards. As a result, the Department did not monitor 139 of 189 (73.5%) Opioid STR subrecipients which received $94.1 million, and 84 of 134 (62.7%) MHBG subrecipients which received $23.4 million during the audit period as required by 45 C.F.R. ?75.352 (d). ? For three of three (100%) audit reports selected for testing, the Department did not complete or provide the management decision letters to the subrecipients. As such, the Department did not issue a management decision (within six months of the report being accepted), as required by 45 C.F.R. ?75.352 (d)(3). ? The Department did not complete 16 of 17 (94.1%) planned SAR on-site/virtual visits during the audit period. Without adequate procedures in place to monitor subrecipient compliance with federal statutes, laws and regulations, there is an increased risk subrecipients may misuse federal funds for unauthorized purposes. This could lead to fines, penalties, or repayment of program funds being imposed by the federal grantor agency. Based on discussions with management, the lack of subrecipient monitoring and documentation was caused by employee turnover, new management, and oversight. We recommend the Department evaluate its current control procedures and processes over subrecipient monitoring and update them as necessary to reasonably ensure compliance with 45 C.F.R. ?75.352. These procedures should include risk management monitoring, increased and SAR desk reviews, and Single Audit reviews. Additionally, the Department should ensure an appropriate level of coverage is obtained for each federal program based on major program testing within the Single Audits. The Department should also put monitoring procedures in place over all subrecipients and not just the 50 ADAMH boards. Management should periodically monitor these procedures to ensure they are operating effectively and as intended.
OPIOID STR & MHBG ? CASH MANAGEMENT Finding Number: 2022-021 State Agency Number: MHA-02 Assistance Listing Number and Title: 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) Federal Award Identification Number / Year: H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Cash Management Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS U.S. Treasury regulations, 31 C.F.R. Part 205, which implemented the Cash Management Improvement Act of 1990 (CMIA), require state recipients enter into agreements that prescribe specific methods of drawing down Federal funds (funding techniques) for selected large programs. The Opioid STR and MHBG programs were not included in the state fiscal year 2022 CMIA Agreement; therefore, 31 C.F.R. ? 205.33(a) sets guidelines which states, in part: A State must minimize the time between the drawdown of Federal funds from the Federal government and their disbursement for Federal program purposes. A Federal Program Agency must limit a funds transfer to a State to the minimum amounts needed by the State and must time the disbursement to be in accord with the actual, immediate cash requirements of the State in carrying out a Federal assistance program or project. The timing and amount of funds transfers must be as close as is administratively feasible to a State's actual cash outlay for direct program costs and the proportionate share of any allowable indirect costs? The Department draws federal funds for the Opioid STR and MHBG programs similarly to those which follow the Modified Pre-Issuance funding technique and considers eight business days a reasonable amount of time to disburse the drawn federal funds for program expenses. It is management?s responsibility to implement control policies and procedures to reasonably ensure draws of federal funds are for immediate cash needs, processed accurately, and disbursed timely in accordance with applicable laws and regulations. During state fiscal year 2022, the Department drew down approximately $112.8 million and $32.9 million in federal funding for the Opioid STR and MHBG programs, respectively. Once voucher payments are approved in the Ohio Administrative Knowledge System (OAKS) and the Payment Management System (PMS), the Department draws the Opioid STR and MHBG funds electronically from PMS to cover the amount of the vouchers, as the account is to maintain a zero cash balance. Before drawing down funds, the Senior Financial Analyst prepares a Cash Request noting the amount to be drawn and OAKS coding. The Cash Request is then forwarded to a different Senior Financial Analyst who draws the funds down in PMS and sends the support documentation back to the original analyst for creation of the revenue receipt in OAKS. The revenue receipt is then submitted to the Community Funding Operations Manager and Ohio Treasurer of State?s Office for approval. Once approved, the Department makes a payment in the form of an electronic funds transfer or check. However, the Department's controls did not prevent noncompliance with the cash management timeliness requirements as follows: ? Of 17 Opioid STR disbursements tested from 17 draws, the Department did not disburse two payments (11.8%) within eight business days of the receipt of federal funds, as required by 31 C.F.R. ? 205.33(a). The Department disbursed the funds three days after the required disbursement date. ? Of three MHBG disbursements tested from three draws, the Department did not disburse one payment (33.3%) within eight business days of receipt of federal funds, as required by 31 C.F.R. ? 205.33(a). The Department disbursed the funds three days after the required disbursement date. Not having effective controls over the timely disbursement of federal funds could lead to the Department not limiting draws to immediate cash needs and not expending funds timely. This could result in noncompliance with 31 C.F.R. ? 205.33(a) and could subject the Department to sanctions, other penalties, or a repayment of part of the grant award amounts. In addition, noncompliance could subject the Department to paying interest charges on these draws. Based on discussions with management and review of supporting documents, the errors were due to voucher processing and approval delays. We recommend the Department evaluate its existing cash management control procedures and update them as necessary to reasonably ensure all federal draw requests are disbursed timely and are drawn only for immediate cash needs, based on the funding technique established in accordance with 31 C.F.R. ? 205.33(a). We also recommend the Department establish procedures to periodically monitor its compliance with the cash management requirements and initiate necessary actions to resolve any noncompliance that results.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-022 State Agency Number: MHA-03 Assistance Listing Numbers and Titles: 93.667 ? Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Block Grants for Community Mental Health Services (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-023 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $123.6 million for 329 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 93.667 SSBG 50 $6,690,064 93.788 Opioid STR 184 $94,056,082 93.958 MHBG 95 $22,856,777 Monthly, the Department?s Fiscal Office is to generate the Transparency Act report from the Grants Funding Management System (GFMS) and review it for completeness and accuracy, then approve it in the GFMS system. The Transparency Act report is then manually entered or uploaded into the FSRS website. However, there is no supervisory review of the report prior to submission to the FSRS website and the controls were not operating effectively during the audit period. As a result, the Department did not submit 311 of 329 (94.5%) subawards within the FSRS website for the SSBG, Opioid STR, and MHBG programs during state fiscal year 2022 as detailed below, per program: SSBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 50 50 50 50 50 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,690,064 $6,690,064 $6,690,064 $6,690,064 $6,690,064 Opioid STR Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 172 172 172 172 172 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $90,965,560 $90,965,560 $90,965,560 $90,965,560 $90,965,560 MHBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 89 89 89 89 89 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $21,818,231 $21,818,231 $21,818,231 $21,818,231 $21,818,231 By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within the FSRS website, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these errors were caused by management and employee turnover and internal system issues to comply with the Transparency Act report format. We recommend the Department collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include a supervisory review of the report information before it is submitted on the FSRS website.
VARIOUS PROGRAMS ? SUBRECIPIENT MONITORING Finding Number: 2022-020 State Agency Number: MHA-01 Assistance Listing Numbers and Titles: 93.667 ?- Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-022 NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ?75.352 states, in part: All pass-through entities must: . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section? (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity; (2) 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 (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 75.521. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing on-site reviews of the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in ? 75.425. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are in compliance with laws and regulations. In addition, sound internal control procedures require management to monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year (SFY) 2022, the Department disbursed approximately $122.8 million to subrecipients of the SSBG, Opioid STR, and MHBG programs, as follows: Assistance Listing Number & Title Disbursements to Subrecipients Number of Subrecipients 93.667 ?- SSBG $6,741,813 50* 93.788 ? Opioid STR $87,873,804 189* 93.958 ? MHBG $28,199,223 134* Combined Total: $122,814,840 ? Includes 50 Alcohol, Drug Addiction, and Mental Health (ADAMH) boards The Department?s Community Monitoring Section (CMS) deploys a risk management monitoring technique for subrecipient monitoring to analyze and evaluate vulnerabilities of federal awards provided to the ADAMH boards. At the beginning of each fiscal year, CMS sends out questionnaires to all 50 ADAMH boards soliciting feedback regarding financial reporting, organizational turnover, number of contracted agencies, and whether any other monitoring (i.e., financial audits, peer review) has been completed. The Department then compiles the Consolidated Unexpended Funds spreadsheet based on financial data obtained from the questionnaires, including any variances in financial data and unexpended federal funds. The CMS Manager then utilizes the Consolidated Unexpended Funds spreadsheet to determine how to manage the State-wide risk and instructs CMS staff how to deploy its monitoring efforts for the SFY. Annually, CMS is to conduct Single Audit report reviews to ensure subrecipients, who have received at least $750,000 in federal funding for the fiscal year, have complied with the requirements for federal awards passed through the Department and make management decisions on any audit findings/corrective action plans within six months of the audit report date. The Department utilizes a database/Audit Review Tracking Spreadsheet to track data on subrecipients, such as: desk reviews, single audit reviews, subrecipient financial information, amounts subrecipients reported on their Schedule of Expenditures of Federal Awards, financial information from the State?s accounting system, and any other information about the subrecipient that would assist in effectively managing State-wide concerns on the federal awards passed through the Department. The Department reviews the Single Audits completed and the Corrective Action Plan (CAP), if applicable, for subrecipients with findings and issues a Management Decision letter to the subrecipient within six months of the audit report date. During the risk management process, CMS evaluates the rotation cycle, questionnaire results, and Board Risk Scores and identifies the Boards for which it will conduct the Stakeholder Assistance Review (SAR) procedures. The Department has designated the SAR process as an increased monitoring technique which is only applied to specific Boards designated as higher risk where the Department will conduct a physical on-site and/or virtual visit during the SFY. The SAR process is performed on a rotation basis to obtain approximately 33% or more coverage of all boards per Department policy. During SFY 2022, the Department performed risk management reviews, on-site reviews, and single audit reviews of the ADAMH boards; however, the following issues were identified: ? The Department did not have procedures in place to monitor Opioid STR and MHBG subrecipients, other than the 50 ADAMH boards. As a result, the Department did not monitor 139 of 189 (73.5%) Opioid STR subrecipients which received $94.1 million, and 84 of 134 (62.7%) MHBG subrecipients which received $23.4 million during the audit period as required by 45 C.F.R. ?75.352 (d). ? For three of three (100%) audit reports selected for testing, the Department did not complete or provide the management decision letters to the subrecipients. As such, the Department did not issue a management decision (within six months of the report being accepted), as required by 45 C.F.R. ?75.352 (d)(3). ? The Department did not complete 16 of 17 (94.1%) planned SAR on-site/virtual visits during the audit period. Without adequate procedures in place to monitor subrecipient compliance with federal statutes, laws and regulations, there is an increased risk subrecipients may misuse federal funds for unauthorized purposes. This could lead to fines, penalties, or repayment of program funds being imposed by the federal grantor agency. Based on discussions with management, the lack of subrecipient monitoring and documentation was caused by employee turnover, new management, and oversight. We recommend the Department evaluate its current control procedures and processes over subrecipient monitoring and update them as necessary to reasonably ensure compliance with 45 C.F.R. ?75.352. These procedures should include risk management monitoring, increased and SAR desk reviews, and Single Audit reviews. Additionally, the Department should ensure an appropriate level of coverage is obtained for each federal program based on major program testing within the Single Audits. The Department should also put monitoring procedures in place over all subrecipients and not just the 50 ADAMH boards. Management should periodically monitor these procedures to ensure they are operating effectively and as intended.
OPIOID STR & MHBG ? CASH MANAGEMENT Finding Number: 2022-021 State Agency Number: MHA-02 Assistance Listing Number and Title: 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) Federal Award Identification Number / Year: H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Cash Management Repeat Finding from Prior Audit? No NONCOMPLIANCE AND MATERIAL WEAKNESS U.S. Treasury regulations, 31 C.F.R. Part 205, which implemented the Cash Management Improvement Act of 1990 (CMIA), require state recipients enter into agreements that prescribe specific methods of drawing down Federal funds (funding techniques) for selected large programs. The Opioid STR and MHBG programs were not included in the state fiscal year 2022 CMIA Agreement; therefore, 31 C.F.R. ? 205.33(a) sets guidelines which states, in part: A State must minimize the time between the drawdown of Federal funds from the Federal government and their disbursement for Federal program purposes. A Federal Program Agency must limit a funds transfer to a State to the minimum amounts needed by the State and must time the disbursement to be in accord with the actual, immediate cash requirements of the State in carrying out a Federal assistance program or project. The timing and amount of funds transfers must be as close as is administratively feasible to a State's actual cash outlay for direct program costs and the proportionate share of any allowable indirect costs? The Department draws federal funds for the Opioid STR and MHBG programs similarly to those which follow the Modified Pre-Issuance funding technique and considers eight business days a reasonable amount of time to disburse the drawn federal funds for program expenses. It is management?s responsibility to implement control policies and procedures to reasonably ensure draws of federal funds are for immediate cash needs, processed accurately, and disbursed timely in accordance with applicable laws and regulations. During state fiscal year 2022, the Department drew down approximately $112.8 million and $32.9 million in federal funding for the Opioid STR and MHBG programs, respectively. Once voucher payments are approved in the Ohio Administrative Knowledge System (OAKS) and the Payment Management System (PMS), the Department draws the Opioid STR and MHBG funds electronically from PMS to cover the amount of the vouchers, as the account is to maintain a zero cash balance. Before drawing down funds, the Senior Financial Analyst prepares a Cash Request noting the amount to be drawn and OAKS coding. The Cash Request is then forwarded to a different Senior Financial Analyst who draws the funds down in PMS and sends the support documentation back to the original analyst for creation of the revenue receipt in OAKS. The revenue receipt is then submitted to the Community Funding Operations Manager and Ohio Treasurer of State?s Office for approval. Once approved, the Department makes a payment in the form of an electronic funds transfer or check. However, the Department's controls did not prevent noncompliance with the cash management timeliness requirements as follows: ? Of 17 Opioid STR disbursements tested from 17 draws, the Department did not disburse two payments (11.8%) within eight business days of the receipt of federal funds, as required by 31 C.F.R. ? 205.33(a). The Department disbursed the funds three days after the required disbursement date. ? Of three MHBG disbursements tested from three draws, the Department did not disburse one payment (33.3%) within eight business days of receipt of federal funds, as required by 31 C.F.R. ? 205.33(a). The Department disbursed the funds three days after the required disbursement date. Not having effective controls over the timely disbursement of federal funds could lead to the Department not limiting draws to immediate cash needs and not expending funds timely. This could result in noncompliance with 31 C.F.R. ? 205.33(a) and could subject the Department to sanctions, other penalties, or a repayment of part of the grant award amounts. In addition, noncompliance could subject the Department to paying interest charges on these draws. Based on discussions with management and review of supporting documents, the errors were due to voucher processing and approval delays. We recommend the Department evaluate its existing cash management control procedures and update them as necessary to reasonably ensure all federal draw requests are disbursed timely and are drawn only for immediate cash needs, based on the funding technique established in accordance with 31 C.F.R. ? 205.33(a). We also recommend the Department establish procedures to periodically monitor its compliance with the cash management requirements and initiate necessary actions to resolve any noncompliance that results.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-022 State Agency Number: MHA-03 Assistance Listing Numbers and Titles: 93.667 ? Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Block Grants for Community Mental Health Services (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-023 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $123.6 million for 329 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 93.667 SSBG 50 $6,690,064 93.788 Opioid STR 184 $94,056,082 93.958 MHBG 95 $22,856,777 Monthly, the Department?s Fiscal Office is to generate the Transparency Act report from the Grants Funding Management System (GFMS) and review it for completeness and accuracy, then approve it in the GFMS system. The Transparency Act report is then manually entered or uploaded into the FSRS website. However, there is no supervisory review of the report prior to submission to the FSRS website and the controls were not operating effectively during the audit period. As a result, the Department did not submit 311 of 329 (94.5%) subawards within the FSRS website for the SSBG, Opioid STR, and MHBG programs during state fiscal year 2022 as detailed below, per program: SSBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 50 50 50 50 50 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,690,064 $6,690,064 $6,690,064 $6,690,064 $6,690,064 Opioid STR Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 172 172 172 172 172 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $90,965,560 $90,965,560 $90,965,560 $90,965,560 $90,965,560 MHBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 89 89 89 89 89 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $21,818,231 $21,818,231 $21,818,231 $21,818,231 $21,818,231 By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within the FSRS website, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these errors were caused by management and employee turnover and internal system issues to comply with the Transparency Act report format. We recommend the Department collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include a supervisory review of the report information before it is submitted on the FSRS website.
VARIOUS PROGRAMS ? SUBRECIPIENT MONITORING Finding Number: 2022-020 State Agency Number: MHA-01 Assistance Listing Numbers and Titles: 93.667 ?- Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Community Mental Health Services Block Grant (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-022 NONCOMPLIANCE AND MATERIAL WEAKNESS 45 C.F.R. ?75.352 states, in part: All pass-through entities must: . . . (b) Evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section? (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: (1) Reviewing financial and performance reports required by the pass-through entity; (2) 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 (3) Issuing a management decision for audit findings pertaining to the Federal award provided to the subrecipient from the pass-through entity as required by ? 75.521. (e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals: (1) Providing subrecipients with training and technical assistance on program-related matters; (2) Performing on-site reviews of the subrecipient's program operations; and (3) Arranging for agreed-upon-procedures engagements as described in ? 75.425. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are in compliance with laws and regulations. In addition, sound internal control procedures require management to monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year (SFY) 2022, the Department disbursed approximately $122.8 million to subrecipients of the SSBG, Opioid STR, and MHBG programs, as follows: Assistance Listing Number & Title Disbursements to Subrecipients Number of Subrecipients 93.667 ?- SSBG $6,741,813 50* 93.788 ? Opioid STR $87,873,804 189* 93.958 ? MHBG $28,199,223 134* Combined Total: $122,814,840 ? Includes 50 Alcohol, Drug Addiction, and Mental Health (ADAMH) boards The Department?s Community Monitoring Section (CMS) deploys a risk management monitoring technique for subrecipient monitoring to analyze and evaluate vulnerabilities of federal awards provided to the ADAMH boards. At the beginning of each fiscal year, CMS sends out questionnaires to all 50 ADAMH boards soliciting feedback regarding financial reporting, organizational turnover, number of contracted agencies, and whether any other monitoring (i.e., financial audits, peer review) has been completed. The Department then compiles the Consolidated Unexpended Funds spreadsheet based on financial data obtained from the questionnaires, including any variances in financial data and unexpended federal funds. The CMS Manager then utilizes the Consolidated Unexpended Funds spreadsheet to determine how to manage the State-wide risk and instructs CMS staff how to deploy its monitoring efforts for the SFY. Annually, CMS is to conduct Single Audit report reviews to ensure subrecipients, who have received at least $750,000 in federal funding for the fiscal year, have complied with the requirements for federal awards passed through the Department and make management decisions on any audit findings/corrective action plans within six months of the audit report date. The Department utilizes a database/Audit Review Tracking Spreadsheet to track data on subrecipients, such as: desk reviews, single audit reviews, subrecipient financial information, amounts subrecipients reported on their Schedule of Expenditures of Federal Awards, financial information from the State?s accounting system, and any other information about the subrecipient that would assist in effectively managing State-wide concerns on the federal awards passed through the Department. The Department reviews the Single Audits completed and the Corrective Action Plan (CAP), if applicable, for subrecipients with findings and issues a Management Decision letter to the subrecipient within six months of the audit report date. During the risk management process, CMS evaluates the rotation cycle, questionnaire results, and Board Risk Scores and identifies the Boards for which it will conduct the Stakeholder Assistance Review (SAR) procedures. The Department has designated the SAR process as an increased monitoring technique which is only applied to specific Boards designated as higher risk where the Department will conduct a physical on-site and/or virtual visit during the SFY. The SAR process is performed on a rotation basis to obtain approximately 33% or more coverage of all boards per Department policy. During SFY 2022, the Department performed risk management reviews, on-site reviews, and single audit reviews of the ADAMH boards; however, the following issues were identified: ? The Department did not have procedures in place to monitor Opioid STR and MHBG subrecipients, other than the 50 ADAMH boards. As a result, the Department did not monitor 139 of 189 (73.5%) Opioid STR subrecipients which received $94.1 million, and 84 of 134 (62.7%) MHBG subrecipients which received $23.4 million during the audit period as required by 45 C.F.R. ?75.352 (d). ? For three of three (100%) audit reports selected for testing, the Department did not complete or provide the management decision letters to the subrecipients. As such, the Department did not issue a management decision (within six months of the report being accepted), as required by 45 C.F.R. ?75.352 (d)(3). ? The Department did not complete 16 of 17 (94.1%) planned SAR on-site/virtual visits during the audit period. Without adequate procedures in place to monitor subrecipient compliance with federal statutes, laws and regulations, there is an increased risk subrecipients may misuse federal funds for unauthorized purposes. This could lead to fines, penalties, or repayment of program funds being imposed by the federal grantor agency. Based on discussions with management, the lack of subrecipient monitoring and documentation was caused by employee turnover, new management, and oversight. We recommend the Department evaluate its current control procedures and processes over subrecipient monitoring and update them as necessary to reasonably ensure compliance with 45 C.F.R. ?75.352. These procedures should include risk management monitoring, increased and SAR desk reviews, and Single Audit reviews. Additionally, the Department should ensure an appropriate level of coverage is obtained for each federal program based on major program testing within the Single Audits. The Department should also put monitoring procedures in place over all subrecipients and not just the 50 ADAMH boards. Management should periodically monitor these procedures to ensure they are operating effectively and as intended.
VARIOUS PROGRAMS ? TRANSPARENCY ACT REPORTING Finding Number: 2022-022 State Agency Number: MHA-03 Assistance Listing Numbers and Titles: 93.667 ? Social Services Block Grant (SSBG) 93.788 ? Opioid STR 93.958 ? Block Grants for Community Mental Health Services (MHBG) 93.958 COVID-19 ? MHBG Federal Award Identification Number / Year: 2101OHSOSR / 2021 (SSBG) 2201OHSOSR / 2022 (SSBG) H79TI081684 / 2020 (Opioid STR) H79TI083294 / 2021 (Opioid STR) B09SM082623 / 2021 (MHBG) B09SM083835 / 2021 (MHBG) B09SM085918 / 2021 (MHBG) B09SM085390 / 2021 (MHBG) B09SM084002 / 2021 (MHBG) Federal Agency: Department of Health and Human Services Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-023 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $123.6 million for 329 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act, under the following major programs. Assistance Listing Number Assistance Listing Title Number of Subawards Amount Disbursed 93.667 SSBG 50 $6,690,064 93.788 Opioid STR 184 $94,056,082 93.958 MHBG 95 $22,856,777 Monthly, the Department?s Fiscal Office is to generate the Transparency Act report from the Grants Funding Management System (GFMS) and review it for completeness and accuracy, then approve it in the GFMS system. The Transparency Act report is then manually entered or uploaded into the FSRS website. However, there is no supervisory review of the report prior to submission to the FSRS website and the controls were not operating effectively during the audit period. As a result, the Department did not submit 311 of 329 (94.5%) subawards within the FSRS website for the SSBG, Opioid STR, and MHBG programs during state fiscal year 2022 as detailed below, per program: SSBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 50 50 50 50 50 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $6,690,064 $6,690,064 $6,690,064 $6,690,064 $6,690,064 Opioid STR Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 172 172 172 172 172 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $90,965,560 $90,965,560 $90,965,560 $90,965,560 $90,965,560 MHBG Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 89 89 89 89 89 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $21,818,231 $21,818,231 $21,818,231 $21,818,231 $21,818,231 By not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within the FSRS website, the risk exists that those using the Transparency Act reports could be relying on inaccurate information. Based on discussions with management, these errors were caused by management and employee turnover and internal system issues to comply with the Transparency Act report format. We recommend the Department collect and report on the FSRS website complete and accurate information regarding subawards made for all programs subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted. These procedures should include a supervisory review of the report information before it is submitted on the FSRS website.
DISASTER GRANTS ? SUBRECIPIENT MONITORING Finding Number: 2022-023 State Agency Number: DPS-01 Assistance Listing Number and Title: 97.036 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) 97.036 COVID-19 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number / Year: 4360-DR-OH-PA / 2018 4424-DR-OH-PA / 2019 4447-DR-OH-PA / 2019 4507-DR-OH-PA / 2020 Federal Agency: Department of Homeland Security Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-024 NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 3002.10 (Adoption of 2 C.F.R. Part 200) gives regulatory effect to the Department of Homeland Security for 2 C.F.R. ? 200.332 which establishes requirements over subawards for pass-through entities and states, in part, that all pass-through entities must: . . . (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are complying with laws and regulations. It is imperative that management monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year 2022, the Department disbursed approximately $141 million in subawards to 179 subrecipients for the Disaster Grants ? Public Assistance (PA) program. After a Presidentially declared disaster or emergency occurs, a State-Local Grant Agreement is signed which outlines applicable laws and regulations the Department and subrecipient must follow in order to receive and maintain funding from the PA Program, including audit requirements if the subrecipient expends more than $750,000 in a year. The Department?s Disaster Recovery Branch (DRB) requires the subrecipient submit a certification for each year PA funds are expended, certifying if a Single Audit is required based on their total federal expenditures. The Emergency Management Grants (EMGrants) system generates these certifications based on when federal funds for a specific PA grant was paid to the subrecipient: the certifications are sent to the subrecipients at the beginning of the calendar year. Once the certification is obtained, the Department performs a desk review utilizing an Audit Review Sheet to determine if a Single Audit should have been required. If a Single Audit was required, the DRB obtains the audit report, identifies any findings related to the PA program, issues a management decision on any findings, and verifies the PA program amounts reported in the Schedule of Expenditures of Federal Awards. However, the Department did not send out certifications to the subrecipients during the audit period, or perform alternative procedures, to ensure the subrecipients obtained a Single Audit report when necessary, as required by 2 C.F.R. ? 200.332 (f). Not adequately monitoring subrecipients to ensure the required audit was performed, increases the risk that subrecipients may not be properly utilizing federal funds or adhering to program requirements which can potentially jeopardize federal funding. This could cause federal funding to be reduced, taken away, or sanctions imposed by the federal grantor agency. Based upon discussion with management, certifications were not sent because they were waiting for an enhancement to the EMGrants system which would improve Single Audit functionality, including the certification process. We recommend the Department evaluate and strengthen existing procedures regarding subrecipient monitoring. The Department should have alternative procedures to verify whether subrecipient audits were performed as required when system functionality is not available, which could include tracking funding sent to the subrecipients and/or reaching out to the subrecipients via other means. Procedures should be adequately documented to provide management reasonable assurance they have been performed. Management should periodically monitor these procedures to ensure they are operating as intended.
DISASTER GRANTS ?TRANSPARENCY ACT REPORTING Finding Number: 2022-024 State Agency Number: DPS-02 Assistance Listing Number and Title: 97.036 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) 97.036 COVID-19 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number / Year: 4360-DR-OH-PA / 2018 4424-DR-OH-PA / 2019 4447-DR-OH-PA / 2019 4507-DR-OH-PA / 2020 Federal Agency: Department of Homeland Security Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-025 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $139 million for 178 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act for the Disaster Grants ? Public Assistance (PA) program. As PA projects are approved by the Federal Emergency Management Agency (FEMA), the key data elements for the report are compiled from subrecipient State-Local Agreements and Project Worksheets (PW), which are maintained in the Department?s Emergency Management Grants (EMGrants) system. The Disaster Services Administrator generates a Transparency Act upload template from the EMGrants system and provides the report for upload to the Budget Analyst Supervisor for review and submission into the FSRS website. However, the Department's internal controls were not operating effectively. As a result, the following errors were noted: Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 18 0 5 1 18 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $10,435,840 $0 $721,980 $107,236 $10,435,840 A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussion with management, these errors were due to staffing issues and an increased workload due to the COVID-19 disaster/emergency declaration, as well as the previous three federal disaster/emergency declarations. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted.
DISASTER GRANTS ? SUBRECIPIENT MONITORING Finding Number: 2022-023 State Agency Number: DPS-01 Assistance Listing Number and Title: 97.036 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) 97.036 COVID-19 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number / Year: 4360-DR-OH-PA / 2018 4424-DR-OH-PA / 2019 4447-DR-OH-PA / 2019 4507-DR-OH-PA / 2020 Federal Agency: Department of Homeland Security Compliance Requirement: Subrecipient Monitoring Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-024 NONCOMPLIANCE AND MATERIAL WEAKNESS 2 C.F.R. ? 3002.10 (Adoption of 2 C.F.R. Part 200) gives regulatory effect to the Department of Homeland Security for 2 C.F.R. ? 200.332 which establishes requirements over subawards for pass-through entities and states, in part, that all pass-through entities must: . . . (f) Verify that every subrecipient is audited as required by Subpart F of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in ? 200.501. Federal regulations require pass-through entities to maintain internal controls over federal programs that provide reasonable assurance they are complying with laws and regulations. It is imperative that management monitor these control procedures to verify they are designed and operating in a manner consistent with federal regulations and program objectives. To be effective, the performance of internal controls must be evidenced in some manner to document the control is in place and functioning as intended. During state fiscal year 2022, the Department disbursed approximately $141 million in subawards to 179 subrecipients for the Disaster Grants ? Public Assistance (PA) program. After a Presidentially declared disaster or emergency occurs, a State-Local Grant Agreement is signed which outlines applicable laws and regulations the Department and subrecipient must follow in order to receive and maintain funding from the PA Program, including audit requirements if the subrecipient expends more than $750,000 in a year. The Department?s Disaster Recovery Branch (DRB) requires the subrecipient submit a certification for each year PA funds are expended, certifying if a Single Audit is required based on their total federal expenditures. The Emergency Management Grants (EMGrants) system generates these certifications based on when federal funds for a specific PA grant was paid to the subrecipient: the certifications are sent to the subrecipients at the beginning of the calendar year. Once the certification is obtained, the Department performs a desk review utilizing an Audit Review Sheet to determine if a Single Audit should have been required. If a Single Audit was required, the DRB obtains the audit report, identifies any findings related to the PA program, issues a management decision on any findings, and verifies the PA program amounts reported in the Schedule of Expenditures of Federal Awards. However, the Department did not send out certifications to the subrecipients during the audit period, or perform alternative procedures, to ensure the subrecipients obtained a Single Audit report when necessary, as required by 2 C.F.R. ? 200.332 (f). Not adequately monitoring subrecipients to ensure the required audit was performed, increases the risk that subrecipients may not be properly utilizing federal funds or adhering to program requirements which can potentially jeopardize federal funding. This could cause federal funding to be reduced, taken away, or sanctions imposed by the federal grantor agency. Based upon discussion with management, certifications were not sent because they were waiting for an enhancement to the EMGrants system which would improve Single Audit functionality, including the certification process. We recommend the Department evaluate and strengthen existing procedures regarding subrecipient monitoring. The Department should have alternative procedures to verify whether subrecipient audits were performed as required when system functionality is not available, which could include tracking funding sent to the subrecipients and/or reaching out to the subrecipients via other means. Procedures should be adequately documented to provide management reasonable assurance they have been performed. Management should periodically monitor these procedures to ensure they are operating as intended.
DISASTER GRANTS ?TRANSPARENCY ACT REPORTING Finding Number: 2022-024 State Agency Number: DPS-02 Assistance Listing Number and Title: 97.036 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) 97.036 COVID-19 ? Disaster Grants ? Public Assistance (Presidentially Declared Disasters) Federal Award Identification Number / Year: 4360-DR-OH-PA / 2018 4424-DR-OH-PA / 2019 4447-DR-OH-PA / 2019 4507-DR-OH-PA / 2020 Federal Agency: Department of Homeland Security Compliance Requirement: Reporting Repeat Finding from Prior Audit? Yes Prior Audit Finding Number: 2021-025 NONCOMPLIANCE AND MATERIAL WEAKNESS The Federal Funding Accountability and Transparency Act (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 C.F.R. Part 170) requires prime recipients of federal awards who make first-tier subawards to report the subaward on the Federal Funding Accountability and Transparency Subaward Reporting System (FSRS) website maintained by the federal Office of Management and Budget. Under the requirements of 2 C.F.R. Part 170, recipients (i.e., direct recipients) of grants or cooperative agreements are required to report first-tier subawards of $30,000 or more on the FSRS website. Prime recipients must report by the end of the month following the month in which the obligation is made. It is management?s responsibility to design and implement internal controls to reasonably ensure compliance with laws and regulations and to ensure management?s objectives are achieved. During state fiscal year 2022, the Department obligated approximately $139 million for 178 subawards which exceeded $30,000 and were required to be reported on the FSRS website in accordance with the Transparency Act for the Disaster Grants ? Public Assistance (PA) program. As PA projects are approved by the Federal Emergency Management Agency (FEMA), the key data elements for the report are compiled from subrecipient State-Local Agreements and Project Worksheets (PW), which are maintained in the Department?s Emergency Management Grants (EMGrants) system. The Disaster Services Administrator generates a Transparency Act upload template from the EMGrants system and provides the report for upload to the Budget Analyst Supervisor for review and submission into the FSRS website. However, the Department's internal controls were not operating effectively. As a result, the following errors were noted: Transactions Tested Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements 18 0 5 1 18 Dollar Amount of Tested Transactions Subaward not reported Report not timely Subaward amount incorrect Subaward missing key elements $10,435,840 $0 $721,980 $107,236 $10,435,840 A lack of adequate internal controls over the preparation and review of reports increases the risk the reports submitted to the federal grantor agency are inaccurate and incomplete. In addition, by not complying with federal Transparency Act reporting requirements, the Department risks federal funding being reduced, taken away, or other sanctions imposed by the federal grantor agency. If the subawards are not reported accurately and timely within FSRS, the risk exists that those using the Transparency Reports could be relying on inaccurate information. Based on discussion with management, these errors were due to staffing issues and an increased workload due to the COVID-19 disaster/emergency declaration, as well as the previous three federal disaster/emergency declarations. We recommend the Department collect and report timely on the FSRS website complete and accurate information regarding subawards subject to the Transparency Act. We also recommend the Department evaluate its Transparency Act reporting control procedures and update them as necessary to ensure they promote compliance with the Federal regulations, as well as accuracy and completeness of information submitted.