Administration Funds Used for Unallowable Activities The Department of Commerce (Department) incorrectly used $18,028 of Unemployment Insurance (UI) administration award funds. During the audit period, the Department spent $116.8 million to administer the UI program. To administer the UI program, funds are allowed for both automation and nonautomation expenditures for the first 15 months of the award period and only automation expenditures for the remaining 21 months of the award period. Auditors tested 26 out of 1,750 UI expenditures, totaling $5.9 million, related to awards that were in the automation only period and found 4 errors totaling $18,028 that were not allowed. As a result, the $18,028 is considered questioned costs and the Department may be required to pay the funds back to the federal government. Furthermore, the funds could have been used for automation activities such as purchasing new computers and software for the UI program. According to Department management, reviews over the expenditures were not detailed enough to ensure only allowable expenditures were charged to the award during the automation period. Federal regulations require costs to conform to limitations and exclusions that apply to the federal award. Federal Award Information: Federal Awarding Agency: U.S. Department of Labor; Assistance Listing Number (title): 17.225 (Unemployment Insurance); Federal Award Identification Number (award period): UI-35666-21-55-A-37(October 1, 2020 ? December 31, 2023). Recommendation: Department management should develop and implement detailed review procedures over expenditures to ensure compliance with federal award requirements. Views of Responsible Officials of the Auditee: The Division of Employment Security agrees with this finding and has implemented corrective actions to strengthen internal controls and help prevent future errors of this nature. See Schedule of Findings and Questioned Costs for footnote.
Inadequate Monitoring of Coronavirus Relief Funds The North Carolina Pandemic Recovery Office (NCPRO), a division of the Office of State Budget and Management, did not adequately monitor $159.9 million in federal funds used for expenditures incurred due to the COVID-19 pandemic. Auditors reviewed the monitoring procedures over subrecipients of state agencies that expended coronavirus relief funds. NCPRO?s monitoring procedures required monthly reviews of these subrecipients? expenditure reports. However, auditors found no evidence of this review. In addition, auditors tested a sample of 40 direct expenditures of state agencies and found no evidence of review of supporting documentation. Lastly, auditors reviewed the risk assessment procedures over all subrecipients. NCPRO?s monitoring plan required additional monitoring activities for all subrecipients assessed as high-risk. Auditors reviewed all 23 subrecipients that were assessed as high-risk and found that these additional monitoring activities were not completed for 9 (39%) of the subrecipients. Inadequate monitoring increases the risk that federal funds may not be used in accordance with the federal requirements, which may have reduced funding available to respond to the COVID-19 pandemic. According to NCPRO management, the agency did not have sufficient personnel to complete the monitoring procedures established at the inception of the program. Subsequent legislation identified NCPRO as responsible for the administration of additional federal COVID-19 programs, and management did not revise existing monitoring procedures to reflect these additional responsibilities. Furthermore, monitoring procedures in place did not require that the results of reviews or other monitoring activities be documented. Federal regulations require NCPRO to: ? Establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. ? 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. This finding was previously reported in the 2021 Statewide Single Audit as finding number 2021-001. Federal Award Information: Federal Awarding Agency: U.S. Department of the Treasury; Assistance Listing Number (title): 21.019 (Coronavirus Relief Fund); Federal Award Identification Numbers (award periods): SLT0025 (March 1, 2020 - December 31, 2021) and SLT0237 (March 1, 2020 - December 31, 2021). Recommendation: NCPRO management should review and revise monitoring procedures over future federal programs as necessary in response to changes in operations, including evaluating the feasibility of procedures given the available personnel. In addition, NCPRO management should ensure that monitoring procedures over future federal programs include a requirement that personnel document completion of the procedures. Views of Responsible Officials of the Auditee: The Office of State Budget and Management and the North Carolina Pandemic Recovery Office accept the finding and have made improvements to ensure future federal funds are adequately monitored. See Schedule of Findings and Questioned Costs for footnote.
Errors in Program Spending The Department of Public Safety (Department) made $486,807 in overpayments of rent and utility assistance from the Emergency Rental Assistance program. During the audit period, the Department processed approximately 159,000 individual household applications totaling $635 million in rent and utility assistance payments. Auditors recalculated the $635 million rent and utility assistance payments to determine if the payment amounts were within the maximum thresholds established by the Department. The Department?s policy states that payment amounts should be the lesser of the established threshold or the amount that is owed by the applicant. Auditors found 25 overpayments totaling $27,015. Auditors then tested 95 individual household applications totaling $923,000 in rent and utility payments and found that documentation for three (3%) applications did not support the amount paid, resulting in overpayments totaling $26,530. Lastly, auditors reviewed the number of months of financial assistance that were provided to an individual household since the inception of the Emergency Rental Assistance program. The Department?s policy states that financial assistance for an individual household may not exceed 15 months. Auditors analyzed the database of approximately 114,000 households and identified 37,762 households that could have received more months of financial assistance than allowed. From the 37,762 households identified above, auditors tested 151 households that received $1.8 million in financial assistance. Auditors found that 84 (56%) households received one to 15 more months of financial assistance than allowed, resulting in overpayments totaling $433,262. As a result, the $486,807 in overpayments is considered questioned costs and the Department may be required to pay the funds back to the federal government. Furthermore, the overspent funds could have been used to provide rent and utility assistance to other eligible households in need. According to Department management, rent and utility payments were calculated using incorrect thresholds due to either a system programming code error or system malfunction. In addition, staff did not follow policies and procedures during the review and approval of financial assistance applications. Federal regulations require that costs be adequately documented and consistent with the program regulations that apply to the federal award. In addition, federal regulations and Department policy limit the financial assistance an eligible household may receive to 15 months. Certain aspects of aspects of this finding were previously reported in the 2021 Statewide Single Audit as finding number 2021-002. Federal Award Information: Federal Awarding Agency: U.S. Department of the Treasury; Assistance Listing Number (title): 21.023 (Emergency Rental Assistance); Federal Award Identification Numbers (award periods): ERA0019 (COVID-19) (January 11, 2021 ? December 31, 2022) and ERAE0098 (COVID-19) (May 5, 2021- September 30, 2025). Recommendation: Department management should analyze the payment calculation errors to identify and make the necessary updates to the system. Until the system issues are resolved, Department management should design and implement alternative procedures to ensure financial assistance payments are calculated correctly. In addition, Department management should develop additional training for staff or establish additional monitoring procedures over the application review and approval process. Views of Responsible Officials of the Auditee: The North Carolina Office of Recovery and Resiliency (NCORR) accepts the Auditor?s finding that the Department made errors in program spending. NCORR?s Compliance and Business Systems Department are actively working to reconcile the population of awards impacted by the errors identified. NCORR previously began recapture efforts on many of the awards identified during this audit, however, any remaining erroneous awards identified will immediately enter the recapture process. In the event any recaptured amounts enter default, NCORR reserves the right to engage federal partners and additional resources, such as collections agencies, to recover the funds. See Schedule of Findings and Questioned Costs for footnote.
Errors in FFATA Reporting The Department of Public Instruction (Department) did not submit complete, accurate, and timely Federal Funding Accountability and Transparency Act (FFATA) reporting for the Education Stabilization Fund - Elementary and Secondary School Emergency Relief (ESSER) and Supporting Effective Instruction (SEI) programs. Auditors reviewed all 298 SEI subawards totaling $60.9 million that were required to be reported to the FFATA Subaward Reporting System (FSRS) during the audit period and found that none were reported as required. Auditors also reviewed all 1,716 ESSER subawards totaling $3.3 billion that were required to be reported to the FSRS during the audit period and found that the Department stopped FFATA reporting on ESSER in December 2021. As a result, 1,291 subawards totaling $230.1 million made during 2022 were not reported. Auditors then tested a sample of 60 ESSER subawards that were reported and found one or more errors. Specifically: ? 51 subawards totaling $760.1 million did not include required information on how the funds were utilized. ? 30 subawards totaling $732 million were reported 47-61 days late. ? 6 subawards totaling $8.2 million were reported with either the wrong subrecipient or federal award information. ? 5 subawards totaling $1.1 million were reported twice. ? 9 subawards totaling $1.1 million were not reported at all. ? 38 subawards totaling $757 million did not agree to supporting documentation by a total of $805 thousand. The FFATA was enacted to help reduce wasteful spending in government by empowering every American citizen with the ability to hold the government accountable for each spending decision. When subaward information is not reported to the FSRS or when it is reported incorrectly, citizens do not have complete and accurate information about how federal funds are being used in their communities. According to Department management: ? The errors found in the ESSER subawards that were reported occurred due to limited staffing resources. ? Additionally, Department management stopped entering ESSER subawards into FSRS in December 2021 due to technical difficulties experienced. ? Lastly, due to the difficulties experienced with entering the ESSER subawards into FSRS, the Department did not attempt to report any subawards for the SEI program. The FFATA requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS no later than the end of the month following the month in which the obligation was made. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.425D (Elementary and Secondary School Emergency Relief Fund); Federal Award Identification Numbers (award periods): S425D200037 (COVID-19) (May 11, 2020 - September 30, 2021) and S425D210037 (COVID-19) (January 5, 2021 - September 30, 2022). Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.425U (American Rescue Plan - Elementary and Secondary School Emergency Relief Fund); Federal Award Identification Number (award period): S425U210037 (COVID-19) (March 24, 2021 - September 30, 2023). Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.367 (Supporting Effective Instruction State Grants); Federal Award Identification Number (award period): S367A210032 (July 1, 2021 - September 30, 2022). Recommendation: Department management should prioritize seeking solutions from the federal oversight agency on technical difficulties. In addition, Department management should ensure staff are available to complete FFATA reporting as required. Views of Responsible Officials of the Auditee: The Department of Public Instruction (DPI) concurs with the finding and recommendation. While additional resources were commissioned to complete FFATA reporting requirements, technical considerations in the FFATA system remain problematic. The system restricts the number of entries per month, which makes it impossible for DPI to report awards within the required time limit. The Office of Federal Programs has continued to make requests to the federal oversight agency for technical assistance with the system. See Schedule of Findings and Questioned Costs for footnote.
Incomplete Monitoring The Department of Public Instruction (Department) did not complete all planned monitoring activities for 329 public school units (PSUs) that received $1.77 billion in federal funding from three programs during the audit period. Auditors reviewed the Department?s fiscal monitoring plan over all three programs which required site visits at 20 PSUs. However, auditors found that the Department did not complete site visits for 10 (50%) PSUs that received $34.1 million in funding. Inadequate monitoring increases the risk that federal funds may not be used in accordance with the federal requirements, which may reduce the funding available for addressing the impacts of the COVID-19 pandemic on public education and providing services to public educators to improve student academic achievement. According to Department management, monitoring activities could not be completed as originally planned due to prioritizing other activities such as assisting external agencies with investigations of PSU?s and performing additional work related to closeout reviews for multiple Charter Schools that closed during the year. Furthermore, staffing issues continued to be a concern and vacancies required management to prioritize the investigations and Charter School closings over fiscal monitoring. Federal regulations require the Department to 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. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.425C (Governor?s Emergency Education Relief Fund); Federal Award Identification Numbers (award periods): S425C200034 (COVID-19) (June 1, 2020 - September 30, 2021) and S425C210034 (COVID-19) (January 8, 2021 - September 30, 2022). Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.425D (Elementary and Secondary School Emergency Relief Fund); Federal Award Identification Numbers (award periods): S425D200037 (COVID-19) (May 11, 2020 ? September 30, 2021) and S425D210037 (COVID-19) (January 5, 2021 - September 30, 2022). Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.425U (American Rescue Plan - Elementary and Secondary School Emergency Relief Fund); Federal Award Identification Number (award period): S425U210037 (COVID-19) (March 24, 2021 - September 30, 2023). Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.367 (Supporting Effective Instruction State Grants); Federal Award Identification Number (award period): S367A210032 (July 1, 2021 - September 30, 2022). Recommendation: Department management should review and revise monitoring procedures as necessary in response to changes in operations. In addition, Department management should prioritize the development of a contingency plan to ensure monitoring is completed when employee turnover occurs. Views of Responsible Officials of the Auditee: The Department of Public Instruction (DPI) concurs with the finding and recommendation. As noted in the finding, ongoing investigations involving external agencies and reviews requiring expanded scope have demanded significantly more time than anticipated by any of the parties involved. Some of this work is ongoing and will continue to impact fiscal monitoring work for the Monitoring and Compliance section within the Office of School Business Services. Other factors impacted the ability of Monitoring and Compliance to complete fiscal monitoring reviews during fiscal year 2022, including staffing issues and multiple Charter School closings, which added complexity to the closure workload and necessitated additional resources. Staffing has been an issue at DPI, but also within the PSUs (Public School Units) selected for monitoring. Vacancies and turnover within PSU positions such as CFO and Director of Federal Programs, resulted in delays throughout the monitoring process. The complexity of various Pandemic Relief funding streams has burdened other agencies with additional audit procedures which required interaction with the monitoring team as they serve as a conduit for other state agencies unfamiliar with PSUs. Monitoring and Compliance serves in this role to lessen the burden and help to facilitate audit work. See Schedule of Findings and Questioned Costs for footnote.
Incomplete Monitoring The Department of Public Instruction (Department) did not complete all planned monitoring activities for 329 public school units (PSUs) that received $1.77 billion in federal funding from three programs during the audit period. See finding 2022-009 for a description.
Errors in FFATA Reporting The Department of Public Instruction (Department) did not submit complete, accurate, and timely Federal Funding Accountability and Transparency Act (FFATA) reporting for the Education Stabilization Fund - Elementary and Secondary School Emergency Relief (ESSER) and Supporting Effective Instruction (SEI) programs. See finding 2022-008 for a description. This finding was previously reported in the 2021 Statewide Single Audit as finding number 2021-015.
Incomplete Monitoring The Department of Public Instruction (Department) did not complete all planned monitoring activities for 329 public school units (PSUs) that received $1.77 billion in federal funding from three programs during the audit period. See finding 2022-009 for a description. This finding was previously reported in the 2021 Statewide Single Audit as finding number 2021-016.
Errors in FFATA Reporting The Department of Public Instruction (Department) did not submit complete, accurate, and timely Federal Funding Accountability and Transparency Act (FFATA) reporting for the Education Stabilization Fund - Elementary and Secondary School Emergency Relief (ESSER) and Supporting Effective Instruction (SEI) programs. See finding 2022-008 for a description.
Incomplete Monitoring The Department of Public Instruction (Department) did not complete all planned monitoring activities for 329 public school units (PSUs) that received $1.77 billion in federal funding from three programs during the audit period. See finding 2022-009 for a description.
Immunization Funds Used for Unallowable Activities The Department of Health and Human Services (Department) incorrectly used $127,676 of Immunization Cooperative Agreements (Immunization) program funds. During the audit period, the Department spent $101.2 million in Immunization funds to establish and maintain health services programs for vaccine-preventable diseases. The Department entered into contracts with vendors and subrecipients (collectively called agreements), to administer the Immunization program. Auditors tested 26 of the 145 agreements that had expenditures totaling $13.3 million and found one (4%) agreement that used the funds on activities not allowed by the Immunization program. As a result, the $127,626 is considered questioned costs and the Department may be required to pay the funds back to the federal government. In addition, the funds could have been used on activities that help control the spread of infectious diseases through immunization. According to Department management, unallowable activities were charged to the Immunization program because a purchase order was mistakenly issued using the incorrect funding source and it was not detected during the review and approval process. Federal regulations require Immunization program funds be used by states to assist them in meeting the costs of establishing and maintaining preventive health service programs. In addition, federal regulations require costs to be necessary and reasonable; authorized; adequately documented, and consistent with the program regulations that apply to the federal award. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.268 (Immunization Cooperation Agreements); Federal Award Identification Number (award period): 6NH231P922624 (COVID-19) (July 1, 2019 - June 30, 2024). Recommendation: Department management should ensure that staff responsible for reviewing and approving program spending have a clear understanding of the funding sources that can be used. Views of Responsible Officials of the Auditee: The Department agrees with this finding regarding the SFY 22 audit of Immunization funds that found that $127,626 was expended against the Immunization grant for consulting services in error. These expenditures were reclassified in September 2022 (SFY 23), which is after the audit period. The Department, in responding to a once-in-a-lifetime, global pandemic, was engaged in multiple cross-departmental functions and activities; including contracts necessary to address the needs of the state throughout the pandemic. This included a significant number of contracts and purchases which had to be completed very quickly. We will ensure that staff responsible for reviewing and approving program spending have a clear understanding of the funding sources that can be used. See Schedule of Findings and Questioned Costs for footnote.
Errors in FFATA Reporting The Department of Health and Human Services (Department) did not report complete and accurate subaward information for some subrecipients of the Immunization Cooperative Agreements grant to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Auditors reviewed all 186 subawards totaling $42.9 million that were required to be reported to the FSRS during the audit period and found the following errors: ? 74 subawards totaling $17.2 million were not reported at all. ? Two subawards totaling $200,419 were overreported by $171,081 because they were reported with incorrect amounts. The FFATA was enacted to help reduce wasteful spending in government by empowering every American citizen with the ability to hold the government accountable for each spending decision. When subaward information is not reported to the FSRS or when it is reported incorrectly, citizens do not have complete and accurate information about how federal funds are being used in their communities. According to Department management, the incomplete and inaccurate reporting occurred because staff prioritized vaccine allocation, distribution, and utilization over FFATA reporting requirements. The FFATA requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.268 (Immunization Cooperative Agreements) Federal Award Identification Numbers (award periods): 6NH23IP922624 (COVID-19) (July 1, 2019 ? June 20, 2024) and 5NH23IP922624-03 (July 1, 2021 ? June 30, 2022). Recommendation: Department management should develop a contingency plan to ensure FFATA reporting is completed and reviewed for accuracy when priorities need to be shifted to meet other demands. Views of Responsible Officials of the Auditee: The Department agrees with the finding and is developing plans to ensure accurate and complete reporting in accordance with the Federal Funding Accountability and Transparency Act (FFATA), specifically during times of business disruption such as a public health emergency. Division of Public Health (DPH) staff were responding to a once-in-a-lifetime, global pandemic and were engaged in the largest mass vaccination efforts in modern public health history. The goal of the DPH Immunization Branch was to implement the COVID-19 Vaccination Program as a critical component to reduce COVID-19-related illnesses, hospitalizations, and deaths and to help restore societal functioning. As such, incomplete reporting occurred because DPH prioritized its limited staff and resources on vaccine allocation, distribution, and utilization over FFATA reporting requirements. Vaccines are one of the greatest success stories in public health and the COVID-19 vaccine is still a critical component of the United States' strategy to address the COVID-19 pandemic. See Schedule of Findings and Questioned Costs for footnote.
Deficiencies in the TANF Eligibility Determination Process The Department of Health and Human Services (Department) paid Temporary Assistance for Needy Families (TANF) benefits to ineligible families based on inaccurate and inadequately documented eligibility determinations. During the audit period, approximately 56,600 families received $129.3 million in TANF benefits. The task of determining eligibility for the TANF program has been delegated to the county departments of social services (DSS). However, the Department was responsible for ensuring compliance with the eligibility requirements, establishing eligibility determination policies, maintaining NC FAST , and facilitating training. Auditors redetermined eligibility for a sample of 93 families that had benefits totaling $212,647 paid to or on their behalf during the audit period. Auditors found two (2.2%) families to be ineligible for cash assistance during the coverage period. Payments totaling $4,935 were paid to these ineligible families. In addition to the eligibility errors noted above, auditors also identified 10 families whose income calculations were inaccurate or whose case files were missing some of the required eligibility documentation. Examples of missing information included kinship verifications, required child custody statements, and online verification documentation. However, when auditors redetermined eligibility using the correct information, the families were found to be eligible. As a result, there is an increased cost to the TANF program, and the funds could have been used to provide benefits to other eligible families. Even though the tests identified only $4,935 that was paid to the ineligible families, if tests were extended to the entire population, questioned costs could be greater than $25,000. According to Department management, the errors occurred because of inaccurate application of established eligibility policies by the county DSS staff. Federal regulations state that recipients are only eligible if they meet the requirements of a financially needy family with children. Further, state eligibility manuals require documentation to support eligibility determinations. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.558 (Temporary Assistance for Needy Families); Federal Award Identification Numbers (award periods): 2101NCTANF (October 1, 2020 to September 30, 2022) and 2201NCTANF (October 1, 2021 to September 30, 2023). Recommendation: Department management should analyze each error to specifically identify why the errors occurred and develop additional training for county DSS staff or establish other procedures as necessary to prevent future errors from occurring. Views of Responsible Officials of the Auditee: Management agrees with this finding and will implement a correction action plan to appropriately assess the issue. See Schedule of Findings and Questioned Costs for footnote.
FFATA Reporting Not Completed The Department of Health and Human Services (Department) did not complete the Federal Funding Accountability and Transparency Act (FFATA) reporting for the Temporary Assistance for Needy Families (TANF) program. Auditors reviewed all 270 subawards totaling $166.8 million that were required to be reported to the FFATA Subaward Reporting System (FSRS) during the audit period and found that none were reported as required. The FFATA was enacted to help reduce wasteful spending in government by empowering every American citizen with the ability to hold the government accountable for each spending decision. When subaward information is not reported to the FSRS, citizens do not have complete and accurate information about how federal funds are being used in their communities. The TANF subawards were administered by two divisions within the Department and according to Department management, ? The Division of Social Services (DSS) did not complete the FFATA reporting for 182 subawards totaling $98.5 million because significant turnover during the audit period reduced the number of staff available to carry out the FFATA reporting requirements. ? The Division of Child Development and Early Education (DCDEE) did not complete the FFATA reporting for the remaining 88 subawards totaling $68.3 million because there was a misunderstanding as to who was responsible for completing the FFATA reporting. The FFATA requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.558 (Temporary Assistance for Needy Families); Federal Award Identification Numbers (award periods): 2101NCTANF (October 1, 2020 ? September 30, 2022) and 2201NCTANF (October 1, 2021 - September 30, 2023). Recommendation: Department management should prioritize the development of a contingency plan to ensure FFATA reporting is completed when employee turnover occurs. Additionally, Department management should provide clear guidance about FFATA reporting responsibilities to all Department divisions. Views of Responsible Officials of the Auditee: The Department agrees with the finding and is prioritizing the development of plans to ensure FFATA reporting compliance. See Schedule of Findings and Questioned Costs for footnote.
Inaccurate TANF Data on Families Was Submitted to the Federal Government The Department of Health and Human Services (Department) submitted inaccurate Temporary Assistance for Needy Families (TANF) data to the U.S. Department of Health and Human Services? Administration for Children and Families (ACF). During the reporting period, approximately 10,600 families received approximately $26.3 million in cash assistance from the TANF program. Auditors tested a sample of case files for 60 families from the quarterly performance reports that were submitted for the reporting period and found 10 (17%) cases where the number of months the participant received assistance was reported incorrectly. In addition, the Department over-reported the total number of families receiving assistance by approximately 2,900 (27%) families. The Department?s failure to submit accurate data could lead to penalties. A penalty of 4% of the adjusted State Family Assistance Grant (SFAG) can be imposed for each quarter the Department fails to submit an accurate, complete, and timely report. Based on the federal fiscal year 2021 SFAG, the penalty could be up to $10.2 million. Furthermore, inaccurate data could impact the Department?s Work Participation Rate (WPR) calculation. The data collected in the quarterly performance report is used by ACF to determine whether the Department achieved the WPR. Failure to achieve the WPR could also result in additional penalties. According to Department management, the quarterly performance reports submitted for federal fiscal year 2021 were not accurate due to a programming code error as well as programming code changes needed after the transition to NC FAST , which occurred in state fiscal year 2015. The Division of Social Services (DSS) is aware of the code changes needed and has been working with the Department?s NC FAST and IT staff to correct coding, criteria, and conversion issues related to the transition to NC FAST. However, they were unable to resolve all issues before submitting the federal fiscal year 2021 reports. Federal regulations require the Department to submit quarterly performance reports with data on the families receiving TANF assistance. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.558 (Temporary Assistance for Needy Families); Federal Award Identification Number (period): 2101NCTANF (October 1, 2020 ? September 30, 2022). Recommendation: Department management should continue working with the NC FAST and IT staff to identify and correct unresolved programming code issues to ensure accurate reports are submitted. In addition, until the programming code issues are resolved, Department management should design and implement alternative procedures to ensure accurate data is reported. Views of Responsible Officials of the Auditee: Management agrees with this finding. The inaccurate reporting of a recipient?s number of months received is a known issue and is a result of coding changes needed after the transition to NC FAST. NC FAST has created a 60 Month Time Clock table to capture this data, and the division is aware of the coding changes needed to use this table for reporting. This coding change is already on the ACF-199 project list, but was unable to be completed prior to the submission of the FFY 21 data. The inaccurate reporting regarding the number of families was due to a programming code error in which cases were not deduplicated for each report month. The incorrect code has been identified and will be corrected to ensure cases are only counted once per month. See Schedule of Findings and Questioned Costs for footnote.
FFATA Reporting Not Completed The Department of Health and Human Services (Department) did not complete the Federal Funding Accountability and Transparency Act (FFATA) reporting for the Social Services Block Grant (SSBG). Auditors reviewed all 240 subawards totaling $55.7 million that were required to be reported to the FFATA Subaward Reporting System (FSRS) during the audit period and found that none were reported as required. The FFATA was enacted to help reduce wasteful spending in government by empowering every American citizen with the ability to hold the government accountable for each spending decision. When subaward information is not reported to the FSRS, citizens do not have complete and accurate information about how federal funds are being used in their communities. The SSBG subawards were administered by two divisions within the Department and according to Department management, ? The Division of Social Services (DSS) did not complete the FFATA reporting for 230 subawards totaling $41.3 million because significant turnover during the audit period reduced the number of staff available to carry out the FFATA reporting requirements. ? The Division of Mental Health, Developmental Disabilities and Substance Abuse Services (DMH/DD/SAS) did not complete the FFATA reporting for the remaining 10 subawards totaling $14.4 million due to essential staff turnover across the Division. The FFATA requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.667 (Social Services Block Grant); Federal Award Identification Numbers (award periods): 2101NCSOSR (October 1, 2020 ? September 30, 2022) and 2201NCSOSR (October 1, 2021 - September 30, 2023). Recommendation: Department management should prioritize the development of a contingency plan to ensure FFATA reporting is completed when employee turnover occurs. Views of Responsible Officials of the Auditee: The Department agrees with the finding and is prioritizing the development of plans to ensure FFATA reporting compliance. See Schedule of Findings and Questioned Costs for footnote.
Inadequate Subrecipient Monitoring The Department of Health and Human Services (Department) did not adequately monitor subrecipients that received $57.5 million in Social Services Block Grant (SSBG) funds during the audit period. SSBG is administered by three divisions within the Department and each division is responsible for monitoring the subrecipients that received SSBG funds. Auditors reviewed the monitoring activities over 28 of the 63 subrecipients and found that no monitoring was completed for 7 (25%) subrecipients that received $3.6 million in SSBG funds. Inadequate monitoring increases the risk that federal funds may not be used in accordance with federal requirements, which may reduce the funding available for providing essential services to individuals and families that help reduce dependency and promote self-sufficiency, and protect children and adults from neglect, abuse, and exploitation. According to Department management, the seven subrecipients were not monitored because the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services implemented a pause in monitoring the Local Management Entity/Managed Care Organizations (LME/MCO?s) due to the coronavirus pandemic; however, management did not get approval from the federal oversight agency. In addition, vacancies in positions responsible for overseeing the monitoring process prevented management from developing alternative monitoring methods during the pause. Federal regulations require the Department to 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. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.667 (Social Services Block Grant) Federal Award Identification Numbers (award periods): 2101NCSOSR (October 1, 2020 - September 30, 2022); 2201NCSOSR (October 1, 2021 ? September 30, 2023). Recommendation: Department management should obtain federal agency oversight approval to deviate from required processes and procedures. In addition, Department management should establish contingency plans to ensure monitoring activities are completed during employee turnover. Views of Responsible Officials of the Auditee: Management agrees with the finding and recommendation. The seven subrecipients were not monitored because the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services prioritized support of the Department?s ongoing response to the global COVID-19 pandemic (e.g., outreach, prevention, testing, vaccination). This resulted in a pause in monitoring the Local Management Entity/Managed Care Organizations (LME/MCO?s); In addition, vacancies in positions responsible for overseeing the monitoring process prevented management from developing alternative monitoring methods during the pause. See Schedule of Findings and Questioned Costs for footnote.
Funds Not Used on Primary Prevention Programs The Department of Health and Human Services (Department) did not allocate and use $84,279 of Substance Abuse Block Grant (SABG) funds for primary prevention programs as required. During the federal award period, the Department was required to allocate and use $9.1 million (20%) of the $45.4 million received for SABG on primary prevention programs designed to reduce the risk of substance abuse. However, the Department only allocated and used 19.82%. As a result, $84,279 is considered questioned costs and the Department may be required to pay the funds back to the federal government. In addition, the funds were not used on prevention strategies as intended, which aim to reduce the impact of substance abuse such as awareness and education to individuals. According to Department management, the error occurred because the staff responsible for award spending misunderstood the calculation requirements for determining the amount required for primary prevention programs. Federal regulations require that no less than 20% of SABG funds be spent on primary prevention programs to educate and counsel individuals to reduce the risk of substance abuse. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.959 (Block Grants for Prevention and Treatment of Substance Abuse); Federal Award Identification Number (award period): B08TI083050 (October 1, 2019 ? September 30, 2021). Recommendation: Department management should ensure that staff responsible for determining award spending have a clear understanding of the calculation requirements. Views of Responsible Officials of the Auditee: Management agrees with the finding and recommendation. The Division of Mental Health, Developmental Disabilities, and Substance Use Services (DMH/DD/SUS) is updating and strengthening its grant financial monitoring policies and processes. See Schedule of Findings and Questioned Costs for footnote.
Funds Spent After Award Ended The Department of Health and Human Services (Department) incorrectly used $317,153 of Substance Abuse Block Grant (SABG) funds from an award that ended. During the award period, the Department spent $45.4 million in SABG funds to provide treatment and prevention services for substance abuse. The Department?s 2020 SABG award period ended on September 30, 2021 and the Department had 90 days after the award ended to pay for expenditures that were incurred during the award period. Auditors tested $2.9 million SABG expenditures that were paid after the award ended and found that expenditures totaling $317,153 (11%) were outside the period of performance. As a result, the Department may be required to pay $317,153 back to the federal government. Furthermore, using grant expenditures outside the award period prevents the Department from monitoring and budgeting program activities, which could put future funding available for additional program activities at risk for reversion to the federal government. According to Department management, expenditures are reclassified to prior award periods to help ensure full utilization of grant funds; however, reviews over the reclassified expenditures were not detailed enough to ensure expenditures were within the period of performance. Federal regulations require the Department to charge the federal award for allowable costs incurred during the period of performance (award period). Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.959 (Block Grants for Prevention and Treatment of Substance Abuse); Federal Award Identification Number (award period): B08TI083050 (October 1, 2019 ? September 30, 2021). Recommendation: Department management should develop and implement detailed review procedures over grant expenditures to ensure compliance with period of performance requirements. Views of Responsible Officials of the Auditee: Management agrees with the finding and recommendation. The Division of Mental Health, Developmental Disabilities, and Substance Use Services is updating and strengthening its grant financial monitoring policies and processes. See Schedule of Findings and Questioned Costs for footnote.
Errors in FFATA Reporting The Department of Health and Human Services (Department) did not report complete and accurate subaward information for some subrecipients of the Substance Abuse Block Grant (SABG) to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Auditors reviewed all 19 subawards totaling $47.8 million that were required to be reported to the FSRS during the audit period and found the following errors: ? 14 subawards totaling $47.3 million were not reported at all. ? 1 subaward totaling $311,000 was overreported by $165,926 because it was reported with the incorrect amount. In addition, auditors found that the Department reported $1.2 million in expenditures for five subrecipients in the wrong period. The FFATA was enacted to help reduce wasteful spending in government by empowering every American citizen with the ability to hold the government accountable for each spending decision. When subaward information is not reported to the FSRS, citizens do not have complete and accurate information about how federal funds are being used in their communities. According to Department management, the incomplete and inaccurate reporting occurred because of essential staff turnover during the year. The FFATA requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.959 (Block Grants for Prevention and Treatment of Substance Abuse); Federal Award Identification Numbers (award periods): B08TI083050 (October 1, 2019 ? September 30, 2021), B08TI083468 (October 1, 2020 - September 30, 2022), and B08TI083540 (March 15, 2021 ? March 14, 2023). Recommendation: Department management should prioritize the development of a contingency plan to ensure FFATA reporting is completed and reviewed for accuracy when employee turnover occurs. Views of Responsible Officials of the Auditee: Management agrees with the finding and recommendation. The Federal Funding Accountability and Transparency Act (FFATA) reporting was not completed correctly as available staff prioritized support of the Department?s ongoing response to the global COVID-19 pandemic (e.g., outreach, prevention, testing, vaccination). Available staff were not adequately trained in FFATA reporting which led to over-reporting the subaward totaling $311,000 by $165,926 due to a duplication error on the FFATA award worksheet for one Local Management Entity/Managed Care Organizations. See Schedule of Findings and Questioned Costs for footnote.
Inadequate Subrecipient Monitoring The Department of Health and Human Services (Department) did not adequately monitor $47 million in federal funds passed to subrecipients for providing treatment and prevention services for substance abuse. Auditors reviewed the monitoring procedures over subrecipients that received substance abuse block grant (SABG) funds. The Department?s monitoring procedures required reviews over both fiscal and program areas for all subrecipients. However, auditors reviewed all 14 subrecipients and found that no reviews were completed for 12 (86%) subrecipients that received $46.3 million in SABG funds. Inadequate monitoring increases the risk that federal funds may not be used in accordance with the federal requirements, which may reduce the funding available for substance abuse treatment and prevention services. According to Department management, the Department implemented a pause in monitoring due to the coronavirus pandemic; however, management did not get approval from the federal oversight agency. In addition, vacancies in positions responsible for overseeing the monitoring process prevented management from developing alternative monitoring methods during the pause. Federal regulations require the Department to 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. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.959 (Block Grants for Prevention and Treatment of Substance Abuse); Federal Award Identification Numbers (award periods): B08TI084663 (October 1, 2021 ? September 30, 2023), B08TI083468 (October 1, 2020 ? September 30, 2022), B08TI083959 (September 1, 2021 ? September 30, 2025), B08TI084599 (September 1, 2021 ? September 30, 2025), and B08TI083540 (March 15, 2021 ? March 14, 2023). Recommendation: Department management should obtain federal oversight agency approval to deviate from required processes and procedures. In addition, Department management should establish contingency plans to ensure monitoring procedures are completed during employee turnover. Views of Responsible Officials of the Auditee: Management agrees with the finding and recommendation. Subrecipients were not monitored because the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services prioritized support of the Department?s ongoing response to the global COVID-19 pandemic (e.g., outreach, prevention, testing, vaccination). This resulted in a pause in monitoring the Local Management Entity/Managed Care Organizations (LME/MCO?s). See Schedule of Findings and Questioned Costs for footnote.
Errors in Medicaid Billing and Payment Process The Department of Health and Human Services (Department) made overpayments to Medicaid providers during the fiscal year ended June 30, 2022. During that period, the Department processed more than 24 million original fee-for-service claims totaling $8.1 billion in payments. Auditors tested the medical documentation for a sample of 151 original fee-for-service claims totaling approximately $19.0 million in payments and identified 14 (9.3%) claims that contained errors. Specifically: ? Auditors were not able to test six (4.0%) claims because the providers failed to provide the medical documentation to support the services that were billed, resulting in overpayments totaling $11,708 (federal share $8,658). ? The medical documentation provided for eight (5.3%) claims did not support the services billed by the provider, resulting in overpayments totaling $1,469 (federal share $1,085). In addition, auditors recalculated the payments for 87 original fee-for-service claims totaling approximately $18.9 million and identified two (2.3%) maternity event claims that were reimbursed at the incorrect billing rate, resulting in net overpayments totaling $125 (federal share $93). As a result, there is an increased cost to the Medicaid program which is jointly financed by the state and federal government and is administered by the state. In addition, when providers do not provide access to medical documentation or do not maintain documentation to support the services billed, it increases the risk of improper payments for ineligible services. Even though the tests identified only $13,302 in overpayments (federal share $9,836), if tests were extended to the entire population, questioned costs could be greater than $25,000 and the Department may be required to pay the funds back to the federal government. According to Department management, there were several reasons for the errors: ? Providers did not respond to several requests by the Division of Health Benefits to provide the medical documentation for audit purposes. ? Providers did not document and/or maintain adequate medical records to support the services billed in the claim. ? The maternity event claims were reimbursed at the incorrect billing rate because the Department did not provide rate changes to General Dynamics Information Technology (GDIT) to update the claims processing system. Federal regulations require costs to be adequately documented and consistent with program regulations that apply to the federal award. In addition, providers sign an agreement that requires them to maintain records disclosing the extent of services furnished to recipients and, on request, furnish the records to the Department. Furthermore, North Carolina General Statute 108C-11 requires providers to cooperate with all announced and unannounced audits. Providers who fail to grant prompt and reasonable access or who fail to timely provide specifically designated documentation to the Department may be terminated from the North Carolina Medicaid program. This finding was previously reported in the 2021 Statewide Single Audit as finding number 2021-021. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.778 (Medical Assistance Program); Federal Award Identification Numbers (award periods): 2105NC5MAP (October 1, 2020 ? September 30, 2021) and 2205NC5MAP (October 1, 2021 ? September 30, 2022). Recommendation: Department management should determine if the failure to submit medical documentation should result in the providers? termination or suspension from participation in the Medicaid program. In addition, Department management should analyze each error and follow-up on the overpaid claims to specifically identify corrective action such as further education of providers and recoupment of costs. Lastly, Department management should work with GDIT to get the claims processing system updated with the correct rates so that the impacted claims can be reprocessed. Views of Responsible Officials of the Auditee: The Division of Health Benefits (DHB) agrees with this finding. DHB is dedicated to claims payment accuracy and continues to work with providers to minimize errors in the claims payment process. DHB will analyze each error and take immediate and appropriate corrective action, including recouping any identified overpayments and emphasizing provider education where necessary. A Tentative Notice of Decision (TND) will be sent to each provider to recoup any overpayment identified. Providers who failed to submit documentation as requested will be reviewed and appropriate corrective action will be taken. DHB will also conduct a six-month post payment review of these providers? fee-for-service paid claims to determine if errors are recurring. See Schedule of Findings and Questioned Costs for footnote.
Deficiencies in the Medicaid Eligibility Determination Process The Department of Health and Human Services (Department) made Medical Assistance Program (Medicaid) payments to providers based on inaccurate and inadequately documented eligibility determinations. During the audit period, approximately 2.2 million beneficiaries received $17.6 billion in Medicaid benefits. The task of determining eligibility for the Medicaid program has been delegated to the county departments of social services (DSS). However, the Department was responsible for ensuring compliance with the eligibility requirements. Auditors redetermined eligibility for a sample of 147 beneficiaries that had benefits totaling $38 million paid on their behalf during the audit period and found two (1.36%) eligibility errors. Specifically: ? One (0.68%) beneficiary was determined eligible for the incorrect Medicaid group, and received services during the coverage period they were not entitled to receive. Payments for those services totaling $846 (federal share $627) were paid on behalf of this beneficiary. ? One (0.68%) beneficiary was found to be ineligible for a portion of the coverage period due to inaccurate eligibility calculations. Payments totaling $92 (federal share $68) were paid on behalf of this beneficiary during the ineligible portion of the coverage period. In addition to the eligibility errors noted above, auditors also identified 32 beneficiaries whose case files were either missing required eligibility documentation, such as self-employment verification, or inaccurate calculations and household composition were used or were missing a completed recertification. However, when auditors redetermined eligibility using the correct information the beneficiaries were found to be eligible. Beneficiaries continued to receive benefits without a completed recertification because of the ongoing coronavirus public health emergency. As a result, there is an increased cost for the Medicaid Program for both the state and federal government. The program is jointly financed by these two governments, and is administered by the state. Even though the tests identified only $938 in overpayments (federal share $695), if tests were extended to the entire population, questioned costs could be greater than $25,000. Although $938 resulted from the errors identified, the amount of Medicaid funds paid on behalf of ineligible beneficiaries is likely greater. Self-attestation by applicants is accepted for certain elements of the Modified Adjusted Gross Income methodology of determining eligibility. Further verification or documentation is not required. Auditors tested participant eligibility using the documentation contained in the case files, which includes self-attested data that could not be verified by the auditors. According to Department management, the errors occurred because of inaccurate application of established eligibility policies by the county DSS staff. The county DSS staff utilize NC FAST to input data and make eligibility determinations; however, the Department is responsible for establishing the eligibility determination policies, maintaining NC FAST, and facilitating training. Federal regulations require that the Department, or its designee, determine eligibility for all individuals applying for or receiving benefits in accordance with eligibility requirements defined in the approved state plan. Further, federal regulations require that documentation be obtained as needed to determine if a beneficiary meets specific income standards and documentation must be maintained to support eligibility determinations. This finding was previously reported in the 2021 Statewide Single Audit as finding number 2021-022. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.778 (Medical Assistance Program); Federal Award Identification Numbers (award periods): 2105NC5MAP (October 1, 2020 ?September 30, 2021) and 2205NC5MAP (October 1, 2021 ? September 30, 2022). Recommendation: Department management should analyze each error to specifically identify why the errors occurred and develop additional training or establish other procedures as necessary to prevent future errors from occurring. Views of Responsible Officials of the Auditee: The Department agrees with this finding. As required by the North Carolina Legislature, the Department has delegated the administration of Medicaid eligibility determinations to the 100 local county offices of the Division of Social Services (DSS). The Department provides the NC FAST system, issues eligibility policies, facilitates training and provides technical support to the county DSS? to enable their administration of eligibility determinations. Using the Centers for Medicare and Medicaid Services? (CMS) Payment Error Rate Measurement (PERM) standards as a model, the Department set an acceptable error rate of 3.2% for the accuracy of county eligibility determinations. The Department monitors the accuracy of each county?s eligibility determinations and implements accuracy improvement plans as necessary. As part of the monitoring process, the Department engages with the counties to determine if adjustments are needed to policy, training facilitation or the NC FAST system. The Department has reviewed the specific errors identified in the audit and will take appropriate steps to correct the improper eligibility determinations. See Schedule of Findings and Questioned Costs for footnote.
Enrollment Status Reporting Errors The College did not accurately report enrollment status changes to the National Student Loan Data System (NSLDS) for students who received federal financial assistance. During the audit period, the College disbursed approximately $24.1 million in federal financial assistance funding to 6,930 students subject to this reporting requirement. Auditors tested the enrollment status reporting for a sample of 40 students who received federal financial assistance and whose enrollment status changed. Three (8%) students were reported with an incorrect status change. Failure to report accurate student enrollment status changes to the NSLDS could prevent eligible students from receiving federal financial assistance in the future. Further, reporting inaccurate data could affect decisions made by the federal government regarding the effectiveness of financial assistance programs. According to College management, the College relied on the National Student Clearinghouse, a third-party service provider, to ensure accurate reporting of enrollment status changes. Management did not monitor the information reported to the NSLDS to ensure its agreement with College records. Federal regulations require the College to accurately report student status changes to the NSLDS. In addition, the NSLDS Enrollment Reporting Guide states that the College is ultimately responsible for accurate reporting. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.063 (Federal Pell Grant Program); Federal Award Identification Number (award period): P063P211921 (July 1, 2021 ? June 30, 2022). Recommendation: College management should implement monitoring procedures over information that the National Student Clearinghouse submits to NSLDS to ensure all students with enrollment status changes are accurately reported. Views of Responsible Officials of the Auditee: College management concurs with the finding and recommendation. On September 2, 2022, management corrected the enrollment status for the three students identified with an incorrect status change. The College?s Senior Registrar is implementing an internal audit process in November to ensure all students with enrollment status changes are accurately reported to the National Student Loan Data System (NSLDS). See Schedule of Findings and Questioned Costs for footnote.
Enrollment Status Reporting Errors The College did not accurately report enrollment status changes to the National Student Loan Data System (NSLDS) for students who received federal financial assistance. During the audit period, the College disbursed approximately $3.5 million in federal financial assistance funding to 978 students subject to this reporting requirement. Auditors tested the enrollment status reporting for a sample of 40 students who received federal financial assistance and whose enrollment status changed. Two (5%) students were reported with an incorrect status change. Failure to report accurate student enrollment status changes to the NSLDS could prevent eligible students from receiving federal financial assistance in the future. Further, reporting inaccurate data could affect decisions made by the federal government regarding the effectiveness of financial assistance programs. According to College management, the College relied on the National Student Clearinghouse (Clearinghouse), a third-party service provider, to ensure accurate reporting of enrollment status changes. Management did not monitor the information the Clearinghouse reported to the NSLDS to ensure it agreed with College records. Federal regulations require the College to accurately report student status changes to the NSLDS. In addition, the NSLDS Enrollment Reporting Guide states that the College is ultimately responsible for accurate reporting. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.063 (Federal Pell Grant Program); Federal Award Identification Number (award period): P063P211936 (July 1, 2021 - June 30, 2022). Recommendation: College management should implement monitoring procedures over information that the Clearinghouse submits to NSLDS to ensure all students with enrollment status changes are accurately reported. Views of Responsible Officials of the Auditee: College management agrees with the audit finding and acknowledges that there were deficiencies in their enrollment status reporting process. To address these deficiencies, effective June 30, 2022, additional verification procedures have been implemented that will ensure that the College is routinely monitoring the information reported to NSLDS as compared with the College?s records to ensure that all student status changes are correctly reported to NSLDS per federal regulations. See Schedule of Findings and Questioned Costs for footnote.
Enrollment Status Reporting Errors The College did not accurately report enrollment status changes to the National Student Loan Data System (NSLDS) for students who received federal financial assistance. During the audit period, the College disbursed approximately $2.8 million in federal financial assistance funding to 720 students subject to this reporting requirement. Auditors tested the enrollment status reporting for a sample of 40 students who received federal financial assistance and whose enrollment status changed. Seven (18%) students were not reported. Failure to report accurate student enrollment status changes to the NSLDS could prevent eligible students from receiving federal financial assistance in the future. Further, reporting inaccurate data could affect decisions made by the federal government regarding the effectiveness of financial assistance programs. According to College management, the errors occurred because personnel omitted an enrollment status change report submission in May 2022 and no independent verification was in place to detect the omission. Federal regulations require the College to accurately report student status changes to the NSLDS. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.063 (Federal Pell Grant Program); Federal Award Identification Number (award period): P063P211966 (July 1, 2021 ? June 30, 2022). Recommendation: College management should implement monitoring procedures, such as an independent verification, to ensure all enrollment status change reports are submitted to NSLDS. Views of Responsible Officials of the Auditee: College management agrees with the finding and recommendation. The Enrollment Reporting schedule in the College Registrar?s Office has been updated to ensure that reporting of student enrollment information occurs every month. Enrollment Reports will be shared with the Financial Aid Office to confirm monthly updates in NSLDS. This procedure will ensure that the College submits all student status changes on a monthly basis. See Schedule of Findings and Questioned Costs for footnote.
Subrecipients Were Not Paid Timely The Department of Health and Human Services (Department) paid subrecipients of the Emergency Solutions Grant Program (ESGP) more than 30 days after receiving the payment request. During the audit period, the Department paid $24.2 million to ESGP subrecipients. Auditors tested a sample of 40 subrecipient payments totaling $365,000 and found that 25 (63%) payments were not paid until 31 to 153 days after receiving the payment requests. Subrecipients rely on ESGP funding to improve the number and quality of emergency shelters, provide essential services to shelter residents, re-house homeless individuals and families, and prevent families and individuals from becoming homeless. When subrecipients do not receive grant funds in a timely manner, it could impact their ability to provide these services to some of the states? most vulnerable citizens. According to Department management, subrecipients were not paid timely because of staffing shortages and a significant increase in workload. In addition to the annual ESGP allocation, the Department received additional funding through the Coronavirus Aid, Relief and Economic Security (CARES) Act. The additional funding significantly increased the number of subrecipient payment requests that needed to be processed, and the combination of key staff positions being vacant and the increase in the workload caused delays in processing the payments. Federal regulations require the Department to pay each subrecipient within 30 days after receiving the subrecipient?s payment request. Federal Award Information: Federal Awarding Agency: U.S. Department of Housing and Urban Development; Assistance Listing Number (title): 14.231 (Emergency Solutions Grant Program); Federal Award Identification Numbers (award periods): E-20-DC-37-001 (September 2, 2020 ? September 2, 2022) and E-20-EW-37-001 (COVID-19) (July 8, 2020 ? July 8, 2022). Recommendation: Department management should establish a contingency plan to ensure continuity of operations when workloads increase, and staffing shortages occur. Views of Responsible Officials of the Auditee: Management agrees with this finding. During the time period within the scope of this audit, three-fourths of the Division of Aging and Adult Services Budget Office positions were vacant. This was also the period of time when the COVID-19 pandemic began, and a significant amount of additional grant funding was received for Emergency Solutions Grant (ESG) and other programs. The combination of staff vacancies and the increased workload resulting from the rapid increase in new funding resulted in delays to approving payments to subrecipients. See Schedule of Findings and Questioned Costs for footnote.
Administration Funds Used for Unallowable Activities The Department of Commerce (Department) incorrectly used $18,028 of Unemployment Insurance (UI) administration award funds. During the audit period, the Department spent $116.8 million to administer the UI program. To administer the UI program, funds are allowed for both automation and nonautomation expenditures for the first 15 months of the award period and only automation expenditures for the remaining 21 months of the award period. Auditors tested 26 out of 1,750 UI expenditures, totaling $5.9 million, related to awards that were in the automation only period and found 4 errors totaling $18,028 that were not allowed. As a result, the $18,028 is considered questioned costs and the Department may be required to pay the funds back to the federal government. Furthermore, the funds could have been used for automation activities such as purchasing new computers and software for the UI program. According to Department management, reviews over the expenditures were not detailed enough to ensure only allowable expenditures were charged to the award during the automation period. Federal regulations require costs to conform to limitations and exclusions that apply to the federal award. Federal Award Information: Federal Awarding Agency: U.S. Department of Labor; Assistance Listing Number (title): 17.225 (Unemployment Insurance); Federal Award Identification Number (award period): UI-35666-21-55-A-37(October 1, 2020 ? December 31, 2023). Recommendation: Department management should develop and implement detailed review procedures over expenditures to ensure compliance with federal award requirements. Views of Responsible Officials of the Auditee: The Division of Employment Security agrees with this finding and has implemented corrective actions to strengthen internal controls and help prevent future errors of this nature. See Schedule of Findings and Questioned Costs for footnote.
Inadequate Monitoring of Coronavirus Relief Funds The North Carolina Pandemic Recovery Office (NCPRO), a division of the Office of State Budget and Management, did not adequately monitor $159.9 million in federal funds used for expenditures incurred due to the COVID-19 pandemic. Auditors reviewed the monitoring procedures over subrecipients of state agencies that expended coronavirus relief funds. NCPRO?s monitoring procedures required monthly reviews of these subrecipients? expenditure reports. However, auditors found no evidence of this review. In addition, auditors tested a sample of 40 direct expenditures of state agencies and found no evidence of review of supporting documentation. Lastly, auditors reviewed the risk assessment procedures over all subrecipients. NCPRO?s monitoring plan required additional monitoring activities for all subrecipients assessed as high-risk. Auditors reviewed all 23 subrecipients that were assessed as high-risk and found that these additional monitoring activities were not completed for 9 (39%) of the subrecipients. Inadequate monitoring increases the risk that federal funds may not be used in accordance with the federal requirements, which may have reduced funding available to respond to the COVID-19 pandemic. According to NCPRO management, the agency did not have sufficient personnel to complete the monitoring procedures established at the inception of the program. Subsequent legislation identified NCPRO as responsible for the administration of additional federal COVID-19 programs, and management did not revise existing monitoring procedures to reflect these additional responsibilities. Furthermore, monitoring procedures in place did not require that the results of reviews or other monitoring activities be documented. Federal regulations require NCPRO to: ? Establish and maintain effective internal control over the federal award that provides reasonable assurance that the entity is managing the award in compliance with federal statutes, regulations, and the terms and conditions of the federal award. ? 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. This finding was previously reported in the 2021 Statewide Single Audit as finding number 2021-001. Federal Award Information: Federal Awarding Agency: U.S. Department of the Treasury; Assistance Listing Number (title): 21.019 (Coronavirus Relief Fund); Federal Award Identification Numbers (award periods): SLT0025 (March 1, 2020 - December 31, 2021) and SLT0237 (March 1, 2020 - December 31, 2021). Recommendation: NCPRO management should review and revise monitoring procedures over future federal programs as necessary in response to changes in operations, including evaluating the feasibility of procedures given the available personnel. In addition, NCPRO management should ensure that monitoring procedures over future federal programs include a requirement that personnel document completion of the procedures. Views of Responsible Officials of the Auditee: The Office of State Budget and Management and the North Carolina Pandemic Recovery Office accept the finding and have made improvements to ensure future federal funds are adequately monitored. See Schedule of Findings and Questioned Costs for footnote.
Errors in Program Spending The Department of Public Safety (Department) made $486,807 in overpayments of rent and utility assistance from the Emergency Rental Assistance program. During the audit period, the Department processed approximately 159,000 individual household applications totaling $635 million in rent and utility assistance payments. Auditors recalculated the $635 million rent and utility assistance payments to determine if the payment amounts were within the maximum thresholds established by the Department. The Department?s policy states that payment amounts should be the lesser of the established threshold or the amount that is owed by the applicant. Auditors found 25 overpayments totaling $27,015. Auditors then tested 95 individual household applications totaling $923,000 in rent and utility payments and found that documentation for three (3%) applications did not support the amount paid, resulting in overpayments totaling $26,530. Lastly, auditors reviewed the number of months of financial assistance that were provided to an individual household since the inception of the Emergency Rental Assistance program. The Department?s policy states that financial assistance for an individual household may not exceed 15 months. Auditors analyzed the database of approximately 114,000 households and identified 37,762 households that could have received more months of financial assistance than allowed. From the 37,762 households identified above, auditors tested 151 households that received $1.8 million in financial assistance. Auditors found that 84 (56%) households received one to 15 more months of financial assistance than allowed, resulting in overpayments totaling $433,262. As a result, the $486,807 in overpayments is considered questioned costs and the Department may be required to pay the funds back to the federal government. Furthermore, the overspent funds could have been used to provide rent and utility assistance to other eligible households in need. According to Department management, rent and utility payments were calculated using incorrect thresholds due to either a system programming code error or system malfunction. In addition, staff did not follow policies and procedures during the review and approval of financial assistance applications. Federal regulations require that costs be adequately documented and consistent with the program regulations that apply to the federal award. In addition, federal regulations and Department policy limit the financial assistance an eligible household may receive to 15 months. Certain aspects of aspects of this finding were previously reported in the 2021 Statewide Single Audit as finding number 2021-002. Federal Award Information: Federal Awarding Agency: U.S. Department of the Treasury; Assistance Listing Number (title): 21.023 (Emergency Rental Assistance); Federal Award Identification Numbers (award periods): ERA0019 (COVID-19) (January 11, 2021 ? December 31, 2022) and ERAE0098 (COVID-19) (May 5, 2021- September 30, 2025). Recommendation: Department management should analyze the payment calculation errors to identify and make the necessary updates to the system. Until the system issues are resolved, Department management should design and implement alternative procedures to ensure financial assistance payments are calculated correctly. In addition, Department management should develop additional training for staff or establish additional monitoring procedures over the application review and approval process. Views of Responsible Officials of the Auditee: The North Carolina Office of Recovery and Resiliency (NCORR) accepts the Auditor?s finding that the Department made errors in program spending. NCORR?s Compliance and Business Systems Department are actively working to reconcile the population of awards impacted by the errors identified. NCORR previously began recapture efforts on many of the awards identified during this audit, however, any remaining erroneous awards identified will immediately enter the recapture process. In the event any recaptured amounts enter default, NCORR reserves the right to engage federal partners and additional resources, such as collections agencies, to recover the funds. See Schedule of Findings and Questioned Costs for footnote.
Errors in FFATA Reporting The Department of Public Instruction (Department) did not submit complete, accurate, and timely Federal Funding Accountability and Transparency Act (FFATA) reporting for the Education Stabilization Fund - Elementary and Secondary School Emergency Relief (ESSER) and Supporting Effective Instruction (SEI) programs. Auditors reviewed all 298 SEI subawards totaling $60.9 million that were required to be reported to the FFATA Subaward Reporting System (FSRS) during the audit period and found that none were reported as required. Auditors also reviewed all 1,716 ESSER subawards totaling $3.3 billion that were required to be reported to the FSRS during the audit period and found that the Department stopped FFATA reporting on ESSER in December 2021. As a result, 1,291 subawards totaling $230.1 million made during 2022 were not reported. Auditors then tested a sample of 60 ESSER subawards that were reported and found one or more errors. Specifically: ? 51 subawards totaling $760.1 million did not include required information on how the funds were utilized. ? 30 subawards totaling $732 million were reported 47-61 days late. ? 6 subawards totaling $8.2 million were reported with either the wrong subrecipient or federal award information. ? 5 subawards totaling $1.1 million were reported twice. ? 9 subawards totaling $1.1 million were not reported at all. ? 38 subawards totaling $757 million did not agree to supporting documentation by a total of $805 thousand. The FFATA was enacted to help reduce wasteful spending in government by empowering every American citizen with the ability to hold the government accountable for each spending decision. When subaward information is not reported to the FSRS or when it is reported incorrectly, citizens do not have complete and accurate information about how federal funds are being used in their communities. According to Department management: ? The errors found in the ESSER subawards that were reported occurred due to limited staffing resources. ? Additionally, Department management stopped entering ESSER subawards into FSRS in December 2021 due to technical difficulties experienced. ? Lastly, due to the difficulties experienced with entering the ESSER subawards into FSRS, the Department did not attempt to report any subawards for the SEI program. The FFATA requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS no later than the end of the month following the month in which the obligation was made. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.425D (Elementary and Secondary School Emergency Relief Fund); Federal Award Identification Numbers (award periods): S425D200037 (COVID-19) (May 11, 2020 - September 30, 2021) and S425D210037 (COVID-19) (January 5, 2021 - September 30, 2022). Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.425U (American Rescue Plan - Elementary and Secondary School Emergency Relief Fund); Federal Award Identification Number (award period): S425U210037 (COVID-19) (March 24, 2021 - September 30, 2023). Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.367 (Supporting Effective Instruction State Grants); Federal Award Identification Number (award period): S367A210032 (July 1, 2021 - September 30, 2022). Recommendation: Department management should prioritize seeking solutions from the federal oversight agency on technical difficulties. In addition, Department management should ensure staff are available to complete FFATA reporting as required. Views of Responsible Officials of the Auditee: The Department of Public Instruction (DPI) concurs with the finding and recommendation. While additional resources were commissioned to complete FFATA reporting requirements, technical considerations in the FFATA system remain problematic. The system restricts the number of entries per month, which makes it impossible for DPI to report awards within the required time limit. The Office of Federal Programs has continued to make requests to the federal oversight agency for technical assistance with the system. See Schedule of Findings and Questioned Costs for footnote.
Incomplete Monitoring The Department of Public Instruction (Department) did not complete all planned monitoring activities for 329 public school units (PSUs) that received $1.77 billion in federal funding from three programs during the audit period. Auditors reviewed the Department?s fiscal monitoring plan over all three programs which required site visits at 20 PSUs. However, auditors found that the Department did not complete site visits for 10 (50%) PSUs that received $34.1 million in funding. Inadequate monitoring increases the risk that federal funds may not be used in accordance with the federal requirements, which may reduce the funding available for addressing the impacts of the COVID-19 pandemic on public education and providing services to public educators to improve student academic achievement. According to Department management, monitoring activities could not be completed as originally planned due to prioritizing other activities such as assisting external agencies with investigations of PSU?s and performing additional work related to closeout reviews for multiple Charter Schools that closed during the year. Furthermore, staffing issues continued to be a concern and vacancies required management to prioritize the investigations and Charter School closings over fiscal monitoring. Federal regulations require the Department to 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. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.425C (Governor?s Emergency Education Relief Fund); Federal Award Identification Numbers (award periods): S425C200034 (COVID-19) (June 1, 2020 - September 30, 2021) and S425C210034 (COVID-19) (January 8, 2021 - September 30, 2022). Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.425D (Elementary and Secondary School Emergency Relief Fund); Federal Award Identification Numbers (award periods): S425D200037 (COVID-19) (May 11, 2020 ? September 30, 2021) and S425D210037 (COVID-19) (January 5, 2021 - September 30, 2022). Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.425U (American Rescue Plan - Elementary and Secondary School Emergency Relief Fund); Federal Award Identification Number (award period): S425U210037 (COVID-19) (March 24, 2021 - September 30, 2023). Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.367 (Supporting Effective Instruction State Grants); Federal Award Identification Number (award period): S367A210032 (July 1, 2021 - September 30, 2022). Recommendation: Department management should review and revise monitoring procedures as necessary in response to changes in operations. In addition, Department management should prioritize the development of a contingency plan to ensure monitoring is completed when employee turnover occurs. Views of Responsible Officials of the Auditee: The Department of Public Instruction (DPI) concurs with the finding and recommendation. As noted in the finding, ongoing investigations involving external agencies and reviews requiring expanded scope have demanded significantly more time than anticipated by any of the parties involved. Some of this work is ongoing and will continue to impact fiscal monitoring work for the Monitoring and Compliance section within the Office of School Business Services. Other factors impacted the ability of Monitoring and Compliance to complete fiscal monitoring reviews during fiscal year 2022, including staffing issues and multiple Charter School closings, which added complexity to the closure workload and necessitated additional resources. Staffing has been an issue at DPI, but also within the PSUs (Public School Units) selected for monitoring. Vacancies and turnover within PSU positions such as CFO and Director of Federal Programs, resulted in delays throughout the monitoring process. The complexity of various Pandemic Relief funding streams has burdened other agencies with additional audit procedures which required interaction with the monitoring team as they serve as a conduit for other state agencies unfamiliar with PSUs. Monitoring and Compliance serves in this role to lessen the burden and help to facilitate audit work. See Schedule of Findings and Questioned Costs for footnote.
Incomplete Monitoring The Department of Public Instruction (Department) did not complete all planned monitoring activities for 329 public school units (PSUs) that received $1.77 billion in federal funding from three programs during the audit period. See finding 2022-009 for a description.
Errors in FFATA Reporting The Department of Public Instruction (Department) did not submit complete, accurate, and timely Federal Funding Accountability and Transparency Act (FFATA) reporting for the Education Stabilization Fund - Elementary and Secondary School Emergency Relief (ESSER) and Supporting Effective Instruction (SEI) programs. See finding 2022-008 for a description. This finding was previously reported in the 2021 Statewide Single Audit as finding number 2021-015.
Incomplete Monitoring The Department of Public Instruction (Department) did not complete all planned monitoring activities for 329 public school units (PSUs) that received $1.77 billion in federal funding from three programs during the audit period. See finding 2022-009 for a description. This finding was previously reported in the 2021 Statewide Single Audit as finding number 2021-016.
Errors in FFATA Reporting The Department of Public Instruction (Department) did not submit complete, accurate, and timely Federal Funding Accountability and Transparency Act (FFATA) reporting for the Education Stabilization Fund - Elementary and Secondary School Emergency Relief (ESSER) and Supporting Effective Instruction (SEI) programs. See finding 2022-008 for a description.
Incomplete Monitoring The Department of Public Instruction (Department) did not complete all planned monitoring activities for 329 public school units (PSUs) that received $1.77 billion in federal funding from three programs during the audit period. See finding 2022-009 for a description.
Immunization Funds Used for Unallowable Activities The Department of Health and Human Services (Department) incorrectly used $127,676 of Immunization Cooperative Agreements (Immunization) program funds. During the audit period, the Department spent $101.2 million in Immunization funds to establish and maintain health services programs for vaccine-preventable diseases. The Department entered into contracts with vendors and subrecipients (collectively called agreements), to administer the Immunization program. Auditors tested 26 of the 145 agreements that had expenditures totaling $13.3 million and found one (4%) agreement that used the funds on activities not allowed by the Immunization program. As a result, the $127,626 is considered questioned costs and the Department may be required to pay the funds back to the federal government. In addition, the funds could have been used on activities that help control the spread of infectious diseases through immunization. According to Department management, unallowable activities were charged to the Immunization program because a purchase order was mistakenly issued using the incorrect funding source and it was not detected during the review and approval process. Federal regulations require Immunization program funds be used by states to assist them in meeting the costs of establishing and maintaining preventive health service programs. In addition, federal regulations require costs to be necessary and reasonable; authorized; adequately documented, and consistent with the program regulations that apply to the federal award. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.268 (Immunization Cooperation Agreements); Federal Award Identification Number (award period): 6NH231P922624 (COVID-19) (July 1, 2019 - June 30, 2024). Recommendation: Department management should ensure that staff responsible for reviewing and approving program spending have a clear understanding of the funding sources that can be used. Views of Responsible Officials of the Auditee: The Department agrees with this finding regarding the SFY 22 audit of Immunization funds that found that $127,626 was expended against the Immunization grant for consulting services in error. These expenditures were reclassified in September 2022 (SFY 23), which is after the audit period. The Department, in responding to a once-in-a-lifetime, global pandemic, was engaged in multiple cross-departmental functions and activities; including contracts necessary to address the needs of the state throughout the pandemic. This included a significant number of contracts and purchases which had to be completed very quickly. We will ensure that staff responsible for reviewing and approving program spending have a clear understanding of the funding sources that can be used. See Schedule of Findings and Questioned Costs for footnote.
Errors in FFATA Reporting The Department of Health and Human Services (Department) did not report complete and accurate subaward information for some subrecipients of the Immunization Cooperative Agreements grant to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Auditors reviewed all 186 subawards totaling $42.9 million that were required to be reported to the FSRS during the audit period and found the following errors: ? 74 subawards totaling $17.2 million were not reported at all. ? Two subawards totaling $200,419 were overreported by $171,081 because they were reported with incorrect amounts. The FFATA was enacted to help reduce wasteful spending in government by empowering every American citizen with the ability to hold the government accountable for each spending decision. When subaward information is not reported to the FSRS or when it is reported incorrectly, citizens do not have complete and accurate information about how federal funds are being used in their communities. According to Department management, the incomplete and inaccurate reporting occurred because staff prioritized vaccine allocation, distribution, and utilization over FFATA reporting requirements. The FFATA requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.268 (Immunization Cooperative Agreements) Federal Award Identification Numbers (award periods): 6NH23IP922624 (COVID-19) (July 1, 2019 ? June 20, 2024) and 5NH23IP922624-03 (July 1, 2021 ? June 30, 2022). Recommendation: Department management should develop a contingency plan to ensure FFATA reporting is completed and reviewed for accuracy when priorities need to be shifted to meet other demands. Views of Responsible Officials of the Auditee: The Department agrees with the finding and is developing plans to ensure accurate and complete reporting in accordance with the Federal Funding Accountability and Transparency Act (FFATA), specifically during times of business disruption such as a public health emergency. Division of Public Health (DPH) staff were responding to a once-in-a-lifetime, global pandemic and were engaged in the largest mass vaccination efforts in modern public health history. The goal of the DPH Immunization Branch was to implement the COVID-19 Vaccination Program as a critical component to reduce COVID-19-related illnesses, hospitalizations, and deaths and to help restore societal functioning. As such, incomplete reporting occurred because DPH prioritized its limited staff and resources on vaccine allocation, distribution, and utilization over FFATA reporting requirements. Vaccines are one of the greatest success stories in public health and the COVID-19 vaccine is still a critical component of the United States' strategy to address the COVID-19 pandemic. See Schedule of Findings and Questioned Costs for footnote.
Deficiencies in the TANF Eligibility Determination Process The Department of Health and Human Services (Department) paid Temporary Assistance for Needy Families (TANF) benefits to ineligible families based on inaccurate and inadequately documented eligibility determinations. During the audit period, approximately 56,600 families received $129.3 million in TANF benefits. The task of determining eligibility for the TANF program has been delegated to the county departments of social services (DSS). However, the Department was responsible for ensuring compliance with the eligibility requirements, establishing eligibility determination policies, maintaining NC FAST , and facilitating training. Auditors redetermined eligibility for a sample of 93 families that had benefits totaling $212,647 paid to or on their behalf during the audit period. Auditors found two (2.2%) families to be ineligible for cash assistance during the coverage period. Payments totaling $4,935 were paid to these ineligible families. In addition to the eligibility errors noted above, auditors also identified 10 families whose income calculations were inaccurate or whose case files were missing some of the required eligibility documentation. Examples of missing information included kinship verifications, required child custody statements, and online verification documentation. However, when auditors redetermined eligibility using the correct information, the families were found to be eligible. As a result, there is an increased cost to the TANF program, and the funds could have been used to provide benefits to other eligible families. Even though the tests identified only $4,935 that was paid to the ineligible families, if tests were extended to the entire population, questioned costs could be greater than $25,000. According to Department management, the errors occurred because of inaccurate application of established eligibility policies by the county DSS staff. Federal regulations state that recipients are only eligible if they meet the requirements of a financially needy family with children. Further, state eligibility manuals require documentation to support eligibility determinations. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.558 (Temporary Assistance for Needy Families); Federal Award Identification Numbers (award periods): 2101NCTANF (October 1, 2020 to September 30, 2022) and 2201NCTANF (October 1, 2021 to September 30, 2023). Recommendation: Department management should analyze each error to specifically identify why the errors occurred and develop additional training for county DSS staff or establish other procedures as necessary to prevent future errors from occurring. Views of Responsible Officials of the Auditee: Management agrees with this finding and will implement a correction action plan to appropriately assess the issue. See Schedule of Findings and Questioned Costs for footnote.
FFATA Reporting Not Completed The Department of Health and Human Services (Department) did not complete the Federal Funding Accountability and Transparency Act (FFATA) reporting for the Temporary Assistance for Needy Families (TANF) program. Auditors reviewed all 270 subawards totaling $166.8 million that were required to be reported to the FFATA Subaward Reporting System (FSRS) during the audit period and found that none were reported as required. The FFATA was enacted to help reduce wasteful spending in government by empowering every American citizen with the ability to hold the government accountable for each spending decision. When subaward information is not reported to the FSRS, citizens do not have complete and accurate information about how federal funds are being used in their communities. The TANF subawards were administered by two divisions within the Department and according to Department management, ? The Division of Social Services (DSS) did not complete the FFATA reporting for 182 subawards totaling $98.5 million because significant turnover during the audit period reduced the number of staff available to carry out the FFATA reporting requirements. ? The Division of Child Development and Early Education (DCDEE) did not complete the FFATA reporting for the remaining 88 subawards totaling $68.3 million because there was a misunderstanding as to who was responsible for completing the FFATA reporting. The FFATA requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.558 (Temporary Assistance for Needy Families); Federal Award Identification Numbers (award periods): 2101NCTANF (October 1, 2020 ? September 30, 2022) and 2201NCTANF (October 1, 2021 - September 30, 2023). Recommendation: Department management should prioritize the development of a contingency plan to ensure FFATA reporting is completed when employee turnover occurs. Additionally, Department management should provide clear guidance about FFATA reporting responsibilities to all Department divisions. Views of Responsible Officials of the Auditee: The Department agrees with the finding and is prioritizing the development of plans to ensure FFATA reporting compliance. See Schedule of Findings and Questioned Costs for footnote.
Inaccurate TANF Data on Families Was Submitted to the Federal Government The Department of Health and Human Services (Department) submitted inaccurate Temporary Assistance for Needy Families (TANF) data to the U.S. Department of Health and Human Services? Administration for Children and Families (ACF). During the reporting period, approximately 10,600 families received approximately $26.3 million in cash assistance from the TANF program. Auditors tested a sample of case files for 60 families from the quarterly performance reports that were submitted for the reporting period and found 10 (17%) cases where the number of months the participant received assistance was reported incorrectly. In addition, the Department over-reported the total number of families receiving assistance by approximately 2,900 (27%) families. The Department?s failure to submit accurate data could lead to penalties. A penalty of 4% of the adjusted State Family Assistance Grant (SFAG) can be imposed for each quarter the Department fails to submit an accurate, complete, and timely report. Based on the federal fiscal year 2021 SFAG, the penalty could be up to $10.2 million. Furthermore, inaccurate data could impact the Department?s Work Participation Rate (WPR) calculation. The data collected in the quarterly performance report is used by ACF to determine whether the Department achieved the WPR. Failure to achieve the WPR could also result in additional penalties. According to Department management, the quarterly performance reports submitted for federal fiscal year 2021 were not accurate due to a programming code error as well as programming code changes needed after the transition to NC FAST , which occurred in state fiscal year 2015. The Division of Social Services (DSS) is aware of the code changes needed and has been working with the Department?s NC FAST and IT staff to correct coding, criteria, and conversion issues related to the transition to NC FAST. However, they were unable to resolve all issues before submitting the federal fiscal year 2021 reports. Federal regulations require the Department to submit quarterly performance reports with data on the families receiving TANF assistance. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.558 (Temporary Assistance for Needy Families); Federal Award Identification Number (period): 2101NCTANF (October 1, 2020 ? September 30, 2022). Recommendation: Department management should continue working with the NC FAST and IT staff to identify and correct unresolved programming code issues to ensure accurate reports are submitted. In addition, until the programming code issues are resolved, Department management should design and implement alternative procedures to ensure accurate data is reported. Views of Responsible Officials of the Auditee: Management agrees with this finding. The inaccurate reporting of a recipient?s number of months received is a known issue and is a result of coding changes needed after the transition to NC FAST. NC FAST has created a 60 Month Time Clock table to capture this data, and the division is aware of the coding changes needed to use this table for reporting. This coding change is already on the ACF-199 project list, but was unable to be completed prior to the submission of the FFY 21 data. The inaccurate reporting regarding the number of families was due to a programming code error in which cases were not deduplicated for each report month. The incorrect code has been identified and will be corrected to ensure cases are only counted once per month. See Schedule of Findings and Questioned Costs for footnote.
FFATA Reporting Not Completed The Department of Health and Human Services (Department) did not complete the Federal Funding Accountability and Transparency Act (FFATA) reporting for the Social Services Block Grant (SSBG). Auditors reviewed all 240 subawards totaling $55.7 million that were required to be reported to the FFATA Subaward Reporting System (FSRS) during the audit period and found that none were reported as required. The FFATA was enacted to help reduce wasteful spending in government by empowering every American citizen with the ability to hold the government accountable for each spending decision. When subaward information is not reported to the FSRS, citizens do not have complete and accurate information about how federal funds are being used in their communities. The SSBG subawards were administered by two divisions within the Department and according to Department management, ? The Division of Social Services (DSS) did not complete the FFATA reporting for 230 subawards totaling $41.3 million because significant turnover during the audit period reduced the number of staff available to carry out the FFATA reporting requirements. ? The Division of Mental Health, Developmental Disabilities and Substance Abuse Services (DMH/DD/SAS) did not complete the FFATA reporting for the remaining 10 subawards totaling $14.4 million due to essential staff turnover across the Division. The FFATA requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.667 (Social Services Block Grant); Federal Award Identification Numbers (award periods): 2101NCSOSR (October 1, 2020 ? September 30, 2022) and 2201NCSOSR (October 1, 2021 - September 30, 2023). Recommendation: Department management should prioritize the development of a contingency plan to ensure FFATA reporting is completed when employee turnover occurs. Views of Responsible Officials of the Auditee: The Department agrees with the finding and is prioritizing the development of plans to ensure FFATA reporting compliance. See Schedule of Findings and Questioned Costs for footnote.
Inadequate Subrecipient Monitoring The Department of Health and Human Services (Department) did not adequately monitor subrecipients that received $57.5 million in Social Services Block Grant (SSBG) funds during the audit period. SSBG is administered by three divisions within the Department and each division is responsible for monitoring the subrecipients that received SSBG funds. Auditors reviewed the monitoring activities over 28 of the 63 subrecipients and found that no monitoring was completed for 7 (25%) subrecipients that received $3.6 million in SSBG funds. Inadequate monitoring increases the risk that federal funds may not be used in accordance with federal requirements, which may reduce the funding available for providing essential services to individuals and families that help reduce dependency and promote self-sufficiency, and protect children and adults from neglect, abuse, and exploitation. According to Department management, the seven subrecipients were not monitored because the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services implemented a pause in monitoring the Local Management Entity/Managed Care Organizations (LME/MCO?s) due to the coronavirus pandemic; however, management did not get approval from the federal oversight agency. In addition, vacancies in positions responsible for overseeing the monitoring process prevented management from developing alternative monitoring methods during the pause. Federal regulations require the Department to 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. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.667 (Social Services Block Grant) Federal Award Identification Numbers (award periods): 2101NCSOSR (October 1, 2020 - September 30, 2022); 2201NCSOSR (October 1, 2021 ? September 30, 2023). Recommendation: Department management should obtain federal agency oversight approval to deviate from required processes and procedures. In addition, Department management should establish contingency plans to ensure monitoring activities are completed during employee turnover. Views of Responsible Officials of the Auditee: Management agrees with the finding and recommendation. The seven subrecipients were not monitored because the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services prioritized support of the Department?s ongoing response to the global COVID-19 pandemic (e.g., outreach, prevention, testing, vaccination). This resulted in a pause in monitoring the Local Management Entity/Managed Care Organizations (LME/MCO?s); In addition, vacancies in positions responsible for overseeing the monitoring process prevented management from developing alternative monitoring methods during the pause. See Schedule of Findings and Questioned Costs for footnote.
Funds Not Used on Primary Prevention Programs The Department of Health and Human Services (Department) did not allocate and use $84,279 of Substance Abuse Block Grant (SABG) funds for primary prevention programs as required. During the federal award period, the Department was required to allocate and use $9.1 million (20%) of the $45.4 million received for SABG on primary prevention programs designed to reduce the risk of substance abuse. However, the Department only allocated and used 19.82%. As a result, $84,279 is considered questioned costs and the Department may be required to pay the funds back to the federal government. In addition, the funds were not used on prevention strategies as intended, which aim to reduce the impact of substance abuse such as awareness and education to individuals. According to Department management, the error occurred because the staff responsible for award spending misunderstood the calculation requirements for determining the amount required for primary prevention programs. Federal regulations require that no less than 20% of SABG funds be spent on primary prevention programs to educate and counsel individuals to reduce the risk of substance abuse. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.959 (Block Grants for Prevention and Treatment of Substance Abuse); Federal Award Identification Number (award period): B08TI083050 (October 1, 2019 ? September 30, 2021). Recommendation: Department management should ensure that staff responsible for determining award spending have a clear understanding of the calculation requirements. Views of Responsible Officials of the Auditee: Management agrees with the finding and recommendation. The Division of Mental Health, Developmental Disabilities, and Substance Use Services (DMH/DD/SUS) is updating and strengthening its grant financial monitoring policies and processes. See Schedule of Findings and Questioned Costs for footnote.
Funds Spent After Award Ended The Department of Health and Human Services (Department) incorrectly used $317,153 of Substance Abuse Block Grant (SABG) funds from an award that ended. During the award period, the Department spent $45.4 million in SABG funds to provide treatment and prevention services for substance abuse. The Department?s 2020 SABG award period ended on September 30, 2021 and the Department had 90 days after the award ended to pay for expenditures that were incurred during the award period. Auditors tested $2.9 million SABG expenditures that were paid after the award ended and found that expenditures totaling $317,153 (11%) were outside the period of performance. As a result, the Department may be required to pay $317,153 back to the federal government. Furthermore, using grant expenditures outside the award period prevents the Department from monitoring and budgeting program activities, which could put future funding available for additional program activities at risk for reversion to the federal government. According to Department management, expenditures are reclassified to prior award periods to help ensure full utilization of grant funds; however, reviews over the reclassified expenditures were not detailed enough to ensure expenditures were within the period of performance. Federal regulations require the Department to charge the federal award for allowable costs incurred during the period of performance (award period). Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.959 (Block Grants for Prevention and Treatment of Substance Abuse); Federal Award Identification Number (award period): B08TI083050 (October 1, 2019 ? September 30, 2021). Recommendation: Department management should develop and implement detailed review procedures over grant expenditures to ensure compliance with period of performance requirements. Views of Responsible Officials of the Auditee: Management agrees with the finding and recommendation. The Division of Mental Health, Developmental Disabilities, and Substance Use Services is updating and strengthening its grant financial monitoring policies and processes. See Schedule of Findings and Questioned Costs for footnote.
Errors in FFATA Reporting The Department of Health and Human Services (Department) did not report complete and accurate subaward information for some subrecipients of the Substance Abuse Block Grant (SABG) to the Federal Funding Accountability and Transparency Act (FFATA) Subaward Reporting System (FSRS). Auditors reviewed all 19 subawards totaling $47.8 million that were required to be reported to the FSRS during the audit period and found the following errors: ? 14 subawards totaling $47.3 million were not reported at all. ? 1 subaward totaling $311,000 was overreported by $165,926 because it was reported with the incorrect amount. In addition, auditors found that the Department reported $1.2 million in expenditures for five subrecipients in the wrong period. The FFATA was enacted to help reduce wasteful spending in government by empowering every American citizen with the ability to hold the government accountable for each spending decision. When subaward information is not reported to the FSRS, citizens do not have complete and accurate information about how federal funds are being used in their communities. According to Department management, the incomplete and inaccurate reporting occurred because of essential staff turnover during the year. The FFATA requires direct recipients of grants or cooperative agreements to report first-tier subawards of $30,000 or more to the FSRS. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.959 (Block Grants for Prevention and Treatment of Substance Abuse); Federal Award Identification Numbers (award periods): B08TI083050 (October 1, 2019 ? September 30, 2021), B08TI083468 (October 1, 2020 - September 30, 2022), and B08TI083540 (March 15, 2021 ? March 14, 2023). Recommendation: Department management should prioritize the development of a contingency plan to ensure FFATA reporting is completed and reviewed for accuracy when employee turnover occurs. Views of Responsible Officials of the Auditee: Management agrees with the finding and recommendation. The Federal Funding Accountability and Transparency Act (FFATA) reporting was not completed correctly as available staff prioritized support of the Department?s ongoing response to the global COVID-19 pandemic (e.g., outreach, prevention, testing, vaccination). Available staff were not adequately trained in FFATA reporting which led to over-reporting the subaward totaling $311,000 by $165,926 due to a duplication error on the FFATA award worksheet for one Local Management Entity/Managed Care Organizations. See Schedule of Findings and Questioned Costs for footnote.
Inadequate Subrecipient Monitoring The Department of Health and Human Services (Department) did not adequately monitor $47 million in federal funds passed to subrecipients for providing treatment and prevention services for substance abuse. Auditors reviewed the monitoring procedures over subrecipients that received substance abuse block grant (SABG) funds. The Department?s monitoring procedures required reviews over both fiscal and program areas for all subrecipients. However, auditors reviewed all 14 subrecipients and found that no reviews were completed for 12 (86%) subrecipients that received $46.3 million in SABG funds. Inadequate monitoring increases the risk that federal funds may not be used in accordance with the federal requirements, which may reduce the funding available for substance abuse treatment and prevention services. According to Department management, the Department implemented a pause in monitoring due to the coronavirus pandemic; however, management did not get approval from the federal oversight agency. In addition, vacancies in positions responsible for overseeing the monitoring process prevented management from developing alternative monitoring methods during the pause. Federal regulations require the Department to 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. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.959 (Block Grants for Prevention and Treatment of Substance Abuse); Federal Award Identification Numbers (award periods): B08TI084663 (October 1, 2021 ? September 30, 2023), B08TI083468 (October 1, 2020 ? September 30, 2022), B08TI083959 (September 1, 2021 ? September 30, 2025), B08TI084599 (September 1, 2021 ? September 30, 2025), and B08TI083540 (March 15, 2021 ? March 14, 2023). Recommendation: Department management should obtain federal oversight agency approval to deviate from required processes and procedures. In addition, Department management should establish contingency plans to ensure monitoring procedures are completed during employee turnover. Views of Responsible Officials of the Auditee: Management agrees with the finding and recommendation. Subrecipients were not monitored because the Division of Mental Health, Developmental Disabilities, and Substance Abuse Services prioritized support of the Department?s ongoing response to the global COVID-19 pandemic (e.g., outreach, prevention, testing, vaccination). This resulted in a pause in monitoring the Local Management Entity/Managed Care Organizations (LME/MCO?s). See Schedule of Findings and Questioned Costs for footnote.
Errors in Medicaid Billing and Payment Process The Department of Health and Human Services (Department) made overpayments to Medicaid providers during the fiscal year ended June 30, 2022. During that period, the Department processed more than 24 million original fee-for-service claims totaling $8.1 billion in payments. Auditors tested the medical documentation for a sample of 151 original fee-for-service claims totaling approximately $19.0 million in payments and identified 14 (9.3%) claims that contained errors. Specifically: ? Auditors were not able to test six (4.0%) claims because the providers failed to provide the medical documentation to support the services that were billed, resulting in overpayments totaling $11,708 (federal share $8,658). ? The medical documentation provided for eight (5.3%) claims did not support the services billed by the provider, resulting in overpayments totaling $1,469 (federal share $1,085). In addition, auditors recalculated the payments for 87 original fee-for-service claims totaling approximately $18.9 million and identified two (2.3%) maternity event claims that were reimbursed at the incorrect billing rate, resulting in net overpayments totaling $125 (federal share $93). As a result, there is an increased cost to the Medicaid program which is jointly financed by the state and federal government and is administered by the state. In addition, when providers do not provide access to medical documentation or do not maintain documentation to support the services billed, it increases the risk of improper payments for ineligible services. Even though the tests identified only $13,302 in overpayments (federal share $9,836), if tests were extended to the entire population, questioned costs could be greater than $25,000 and the Department may be required to pay the funds back to the federal government. According to Department management, there were several reasons for the errors: ? Providers did not respond to several requests by the Division of Health Benefits to provide the medical documentation for audit purposes. ? Providers did not document and/or maintain adequate medical records to support the services billed in the claim. ? The maternity event claims were reimbursed at the incorrect billing rate because the Department did not provide rate changes to General Dynamics Information Technology (GDIT) to update the claims processing system. Federal regulations require costs to be adequately documented and consistent with program regulations that apply to the federal award. In addition, providers sign an agreement that requires them to maintain records disclosing the extent of services furnished to recipients and, on request, furnish the records to the Department. Furthermore, North Carolina General Statute 108C-11 requires providers to cooperate with all announced and unannounced audits. Providers who fail to grant prompt and reasonable access or who fail to timely provide specifically designated documentation to the Department may be terminated from the North Carolina Medicaid program. This finding was previously reported in the 2021 Statewide Single Audit as finding number 2021-021. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.778 (Medical Assistance Program); Federal Award Identification Numbers (award periods): 2105NC5MAP (October 1, 2020 ? September 30, 2021) and 2205NC5MAP (October 1, 2021 ? September 30, 2022). Recommendation: Department management should determine if the failure to submit medical documentation should result in the providers? termination or suspension from participation in the Medicaid program. In addition, Department management should analyze each error and follow-up on the overpaid claims to specifically identify corrective action such as further education of providers and recoupment of costs. Lastly, Department management should work with GDIT to get the claims processing system updated with the correct rates so that the impacted claims can be reprocessed. Views of Responsible Officials of the Auditee: The Division of Health Benefits (DHB) agrees with this finding. DHB is dedicated to claims payment accuracy and continues to work with providers to minimize errors in the claims payment process. DHB will analyze each error and take immediate and appropriate corrective action, including recouping any identified overpayments and emphasizing provider education where necessary. A Tentative Notice of Decision (TND) will be sent to each provider to recoup any overpayment identified. Providers who failed to submit documentation as requested will be reviewed and appropriate corrective action will be taken. DHB will also conduct a six-month post payment review of these providers? fee-for-service paid claims to determine if errors are recurring. See Schedule of Findings and Questioned Costs for footnote.
Deficiencies in the Medicaid Eligibility Determination Process The Department of Health and Human Services (Department) made Medical Assistance Program (Medicaid) payments to providers based on inaccurate and inadequately documented eligibility determinations. During the audit period, approximately 2.2 million beneficiaries received $17.6 billion in Medicaid benefits. The task of determining eligibility for the Medicaid program has been delegated to the county departments of social services (DSS). However, the Department was responsible for ensuring compliance with the eligibility requirements. Auditors redetermined eligibility for a sample of 147 beneficiaries that had benefits totaling $38 million paid on their behalf during the audit period and found two (1.36%) eligibility errors. Specifically: ? One (0.68%) beneficiary was determined eligible for the incorrect Medicaid group, and received services during the coverage period they were not entitled to receive. Payments for those services totaling $846 (federal share $627) were paid on behalf of this beneficiary. ? One (0.68%) beneficiary was found to be ineligible for a portion of the coverage period due to inaccurate eligibility calculations. Payments totaling $92 (federal share $68) were paid on behalf of this beneficiary during the ineligible portion of the coverage period. In addition to the eligibility errors noted above, auditors also identified 32 beneficiaries whose case files were either missing required eligibility documentation, such as self-employment verification, or inaccurate calculations and household composition were used or were missing a completed recertification. However, when auditors redetermined eligibility using the correct information the beneficiaries were found to be eligible. Beneficiaries continued to receive benefits without a completed recertification because of the ongoing coronavirus public health emergency. As a result, there is an increased cost for the Medicaid Program for both the state and federal government. The program is jointly financed by these two governments, and is administered by the state. Even though the tests identified only $938 in overpayments (federal share $695), if tests were extended to the entire population, questioned costs could be greater than $25,000. Although $938 resulted from the errors identified, the amount of Medicaid funds paid on behalf of ineligible beneficiaries is likely greater. Self-attestation by applicants is accepted for certain elements of the Modified Adjusted Gross Income methodology of determining eligibility. Further verification or documentation is not required. Auditors tested participant eligibility using the documentation contained in the case files, which includes self-attested data that could not be verified by the auditors. According to Department management, the errors occurred because of inaccurate application of established eligibility policies by the county DSS staff. The county DSS staff utilize NC FAST to input data and make eligibility determinations; however, the Department is responsible for establishing the eligibility determination policies, maintaining NC FAST, and facilitating training. Federal regulations require that the Department, or its designee, determine eligibility for all individuals applying for or receiving benefits in accordance with eligibility requirements defined in the approved state plan. Further, federal regulations require that documentation be obtained as needed to determine if a beneficiary meets specific income standards and documentation must be maintained to support eligibility determinations. This finding was previously reported in the 2021 Statewide Single Audit as finding number 2021-022. Federal Award Information: Federal Awarding Agency: U.S. Department of Health and Human Services; Assistance Listing Number (title): 93.778 (Medical Assistance Program); Federal Award Identification Numbers (award periods): 2105NC5MAP (October 1, 2020 ?September 30, 2021) and 2205NC5MAP (October 1, 2021 ? September 30, 2022). Recommendation: Department management should analyze each error to specifically identify why the errors occurred and develop additional training or establish other procedures as necessary to prevent future errors from occurring. Views of Responsible Officials of the Auditee: The Department agrees with this finding. As required by the North Carolina Legislature, the Department has delegated the administration of Medicaid eligibility determinations to the 100 local county offices of the Division of Social Services (DSS). The Department provides the NC FAST system, issues eligibility policies, facilitates training and provides technical support to the county DSS? to enable their administration of eligibility determinations. Using the Centers for Medicare and Medicaid Services? (CMS) Payment Error Rate Measurement (PERM) standards as a model, the Department set an acceptable error rate of 3.2% for the accuracy of county eligibility determinations. The Department monitors the accuracy of each county?s eligibility determinations and implements accuracy improvement plans as necessary. As part of the monitoring process, the Department engages with the counties to determine if adjustments are needed to policy, training facilitation or the NC FAST system. The Department has reviewed the specific errors identified in the audit and will take appropriate steps to correct the improper eligibility determinations. See Schedule of Findings and Questioned Costs for footnote.
Enrollment Status Reporting Errors The College did not accurately report enrollment status changes to the National Student Loan Data System (NSLDS) for students who received federal financial assistance. During the audit period, the College disbursed approximately $24.1 million in federal financial assistance funding to 6,930 students subject to this reporting requirement. Auditors tested the enrollment status reporting for a sample of 40 students who received federal financial assistance and whose enrollment status changed. Three (8%) students were reported with an incorrect status change. Failure to report accurate student enrollment status changes to the NSLDS could prevent eligible students from receiving federal financial assistance in the future. Further, reporting inaccurate data could affect decisions made by the federal government regarding the effectiveness of financial assistance programs. According to College management, the College relied on the National Student Clearinghouse, a third-party service provider, to ensure accurate reporting of enrollment status changes. Management did not monitor the information reported to the NSLDS to ensure its agreement with College records. Federal regulations require the College to accurately report student status changes to the NSLDS. In addition, the NSLDS Enrollment Reporting Guide states that the College is ultimately responsible for accurate reporting. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.063 (Federal Pell Grant Program); Federal Award Identification Number (award period): P063P211921 (July 1, 2021 ? June 30, 2022). Recommendation: College management should implement monitoring procedures over information that the National Student Clearinghouse submits to NSLDS to ensure all students with enrollment status changes are accurately reported. Views of Responsible Officials of the Auditee: College management concurs with the finding and recommendation. On September 2, 2022, management corrected the enrollment status for the three students identified with an incorrect status change. The College?s Senior Registrar is implementing an internal audit process in November to ensure all students with enrollment status changes are accurately reported to the National Student Loan Data System (NSLDS). See Schedule of Findings and Questioned Costs for footnote.
Enrollment Status Reporting Errors The College did not accurately report enrollment status changes to the National Student Loan Data System (NSLDS) for students who received federal financial assistance. During the audit period, the College disbursed approximately $3.5 million in federal financial assistance funding to 978 students subject to this reporting requirement. Auditors tested the enrollment status reporting for a sample of 40 students who received federal financial assistance and whose enrollment status changed. Two (5%) students were reported with an incorrect status change. Failure to report accurate student enrollment status changes to the NSLDS could prevent eligible students from receiving federal financial assistance in the future. Further, reporting inaccurate data could affect decisions made by the federal government regarding the effectiveness of financial assistance programs. According to College management, the College relied on the National Student Clearinghouse (Clearinghouse), a third-party service provider, to ensure accurate reporting of enrollment status changes. Management did not monitor the information the Clearinghouse reported to the NSLDS to ensure it agreed with College records. Federal regulations require the College to accurately report student status changes to the NSLDS. In addition, the NSLDS Enrollment Reporting Guide states that the College is ultimately responsible for accurate reporting. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.063 (Federal Pell Grant Program); Federal Award Identification Number (award period): P063P211936 (July 1, 2021 - June 30, 2022). Recommendation: College management should implement monitoring procedures over information that the Clearinghouse submits to NSLDS to ensure all students with enrollment status changes are accurately reported. Views of Responsible Officials of the Auditee: College management agrees with the audit finding and acknowledges that there were deficiencies in their enrollment status reporting process. To address these deficiencies, effective June 30, 2022, additional verification procedures have been implemented that will ensure that the College is routinely monitoring the information reported to NSLDS as compared with the College?s records to ensure that all student status changes are correctly reported to NSLDS per federal regulations. See Schedule of Findings and Questioned Costs for footnote.
Enrollment Status Reporting Errors The College did not accurately report enrollment status changes to the National Student Loan Data System (NSLDS) for students who received federal financial assistance. During the audit period, the College disbursed approximately $2.8 million in federal financial assistance funding to 720 students subject to this reporting requirement. Auditors tested the enrollment status reporting for a sample of 40 students who received federal financial assistance and whose enrollment status changed. Seven (18%) students were not reported. Failure to report accurate student enrollment status changes to the NSLDS could prevent eligible students from receiving federal financial assistance in the future. Further, reporting inaccurate data could affect decisions made by the federal government regarding the effectiveness of financial assistance programs. According to College management, the errors occurred because personnel omitted an enrollment status change report submission in May 2022 and no independent verification was in place to detect the omission. Federal regulations require the College to accurately report student status changes to the NSLDS. Federal Award Information: Federal Awarding Agency: U.S. Department of Education; Assistance Listing Number (title): 84.063 (Federal Pell Grant Program); Federal Award Identification Number (award period): P063P211966 (July 1, 2021 ? June 30, 2022). Recommendation: College management should implement monitoring procedures, such as an independent verification, to ensure all enrollment status change reports are submitted to NSLDS. Views of Responsible Officials of the Auditee: College management agrees with the finding and recommendation. The Enrollment Reporting schedule in the College Registrar?s Office has been updated to ensure that reporting of student enrollment information occurs every month. Enrollment Reports will be shared with the Financial Aid Office to confirm monthly updates in NSLDS. This procedure will ensure that the College submits all student status changes on a monthly basis. See Schedule of Findings and Questioned Costs for footnote.
Subrecipients Were Not Paid Timely The Department of Health and Human Services (Department) paid subrecipients of the Emergency Solutions Grant Program (ESGP) more than 30 days after receiving the payment request. During the audit period, the Department paid $24.2 million to ESGP subrecipients. Auditors tested a sample of 40 subrecipient payments totaling $365,000 and found that 25 (63%) payments were not paid until 31 to 153 days after receiving the payment requests. Subrecipients rely on ESGP funding to improve the number and quality of emergency shelters, provide essential services to shelter residents, re-house homeless individuals and families, and prevent families and individuals from becoming homeless. When subrecipients do not receive grant funds in a timely manner, it could impact their ability to provide these services to some of the states? most vulnerable citizens. According to Department management, subrecipients were not paid timely because of staffing shortages and a significant increase in workload. In addition to the annual ESGP allocation, the Department received additional funding through the Coronavirus Aid, Relief and Economic Security (CARES) Act. The additional funding significantly increased the number of subrecipient payment requests that needed to be processed, and the combination of key staff positions being vacant and the increase in the workload caused delays in processing the payments. Federal regulations require the Department to pay each subrecipient within 30 days after receiving the subrecipient?s payment request. Federal Award Information: Federal Awarding Agency: U.S. Department of Housing and Urban Development; Assistance Listing Number (title): 14.231 (Emergency Solutions Grant Program); Federal Award Identification Numbers (award periods): E-20-DC-37-001 (September 2, 2020 ? September 2, 2022) and E-20-EW-37-001 (COVID-19) (July 8, 2020 ? July 8, 2022). Recommendation: Department management should establish a contingency plan to ensure continuity of operations when workloads increase, and staffing shortages occur. Views of Responsible Officials of the Auditee: Management agrees with this finding. During the time period within the scope of this audit, three-fourths of the Division of Aging and Adult Services Budget Office positions were vacant. This was also the period of time when the COVID-19 pandemic began, and a significant amount of additional grant funding was received for Emergency Solutions Grant (ESG) and other programs. The combination of staff vacancies and the increased workload resulting from the rapid increase in new funding resulted in delays to approving payments to subrecipients. See Schedule of Findings and Questioned Costs for footnote.