Program: Various, including AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.558 ? Temporary Assistance for Needy Families; AL 93.566 ? Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 ? Child Care and Development Block Grant ? Allowable Costs/Cost Principles Grant Number & Year: Various, including 202121S251443, FFY 2021; 202222S251443, FFY 2022; 1901NETANF, FFY 2019; 2101NERCMA, FFY 2021; 2201NERCMA, FFY 2022; 2201NECCDD, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303 (October 1, 2021) states, in relevant part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be necessary, reasonable, and adequately documented. 45 CFR ? 75.302 (October 1, 2021) requires financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 400.1 (January 1, 2022), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. 2 CFR ? 200.303 (January 1, 2022) states, in part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. 45 CFR ? 75.511(b) and 2 CFR ? 200.511(b) (January 1, 2022) state, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that amounts charged to Federal programs are proper. Condition: The Agency did not properly charge Federal programs for seven allocations tested. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-031, 2021-032 Questioned Costs: $44,356 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For seven of 14 allocations tested, we noted the following: ? We tested the allocation of cost center 25C21940 Field Office Resource Development for the quarter ended September 30, 2021, which is allocated based on Time & Effort reports. The payroll costs for 85 employees were charged to the cost center; however, four of the employees? payroll costs should not have been charged to the cost center. The four employees tested included a Federal Aid Administrator, a Program Accuracy Specialist, and two Office Specialists. The supervisors they worked with were not charged to this cost center, and the employees were not employed as Resource Developers, which was the job title of most of the employees included in this cost center. As a result of these employees being charged to the Resource Development cost center instead of their appropriate cost centers, Child Care and Development, Foster Care, Adoption Assistance, Guardianship Assistance, and Medicaid were not charged correctly, ranging from undercharges of $2,653 to overcharges of $2,402. Additionally, we were unable to determine how the payroll costs of $9,858 to the Federal Aid Administrator should have been allocated. The Resource Development cost center allocated $1,444,162 for the quarter ended September 30, 2021. A similar finding was noted in the prior audit. ? We tested the allocation of cost center 25C20680 Legal Services General Legal Teams for the quarter ended June 30, 2022, which is allocated based on Time & Effort reports. The payroll costs for a Legislative Coordinator were recorded to this cost center during the quarter. However, these costs should have been recorded to cost center 25C20720 Communications and Legislative Services Administration. As a result, this employee?s payroll costs of $15,777 during the quarter were not allocated to Federal programs correctly. We were unable to determine how these payroll costs should have been allocated. The Legal Services General Legal Teams cost center allocated $1,332,052 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21960 Field Office Social Services Casework for quarter ended September 30, 2021, which is allocated based on random moment time studies (RMTS) results. The Bridges to Independence program and Guardianship Assistance program should have been allocated $1,464 each from this cost center; however, the Agency did not include these programs in the allocation. As a result, the Federal grants for Refugee and Entrant Assistance, Child Care and Development, Foster Care, Adoption Assistance, Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Medicaid were overcharged, ranging from $3 to $982, and the Guardianship Assistance grant was undercharged $732. The Field Office Social Services Casework cost center allocated $8,099,617 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C21920 Field Office Child Protection & Safety Services for the quarter ended June 30, 2022, which is allocated based on RMTS results. The Agency began using a new RMTS system in January 2022; however, the Agency did not set up the quarterly summary reports correctly. Below are the issues noted: o RMTS observations for Trial Home Visits were not included in the allocation. As a result, State programs were undercharged, and Federal programs were overcharged. o The RMTS observations for Child Protection Initial Assessment were not properly allocated. As a result, Foster Care was overcharged, and Adoption and Guardianship were undercharged. o The RMTS observations for Before or After Work Hours were incorrectly included in the State?s allocation. As a result, Federal programs were undercharged. In total, Federal grants for Adoption Assistance, Foster Care, and Guardianship Assistance were undercharged $28,560, $113,762, and $1,990, respectively. The Field Office Child Protection & Safety Services cost center allocated $12,429,881 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21910 Field Office Administration for the quarter ended June 30, 2022, which is allocated based on labor hours. The Agency did not include all of the applicable labor hours for the Medicaid program. As a result, the Federal grants for Adoption Assistance, Foster Care, Guardianship Assistance, Refugee and Entrant Assistance, Child Care and Development, TANF, and SNAP were overcharged, ranging from $265 to $30,556, and the Medicaid grant was undercharged $235,906. The Field Office Administration cost center allocated $3,236,547 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C20990 IST Application NFOCUS Applications for the quarter ended September 30, 2021, which is allocated based on client counts per NFOCUS/MMIS reports. We noted that the Foster Care and TANF recipient counts used in the allocation did not agree to support. The Foster Care count included 71 clients that were paid with State funds, resulting in $265 being overcharged to the Foster Care grant, and the TANF count included 48 clients that were paid with State funds, resulting in $358 being overcharged to the TANF grant. Additionally, we were unable to trace the member counts to documentation that supported allocating $1,853,284 to Medicaid and $283,190 to the Children?s Health Insurance Program (CHIP). The Agency did not maintain the member count reports used at the time of the allocation. The Agency was able to generate a historical report; however, while the report amounts were similar, they did not agree with the counts used in the allocation. The Agency did maintain system summary reports at the time of the allocation, and the total counts on the summary reports did agree to amounts used for the allocation. However, as the summary reports used did not maintain the detail of members counted, we could not verify the accuracy of the reports used. The IST Application Services NFOCUS Applications cost center allocated $3,800,340 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C23823 iServe IAPD H971 ? Shared for the quarter ending June 30, 2022. The Agency is developing the new iServe Nebraska Portal, which is an application for Nebraskans to apply for benefits from Federal and State programs. This application will be replacing ACCESSNebraska, the current application used by Nebraskans to apply for benefits. For the implementation phase of the project, the Agency was only allocating costs to the following four programs: LIHEAP, TANF, SNAP, and Medicaid. However, there are other Federal and State programs that will utilize the iServe application. We asked for documentation to support that these were the only four programs that were benefiting from this stage of the project. The Agency provided correspondence from its Federal contacts, which stated: ?As long as SNAP, Medicaid, LIHEAP, and TANF are the only benefiting programs for the State?s iServe Nebraska Portal project, the State may just include these four programs in the development of its cost allocation plan. If/when the State decides to add other Federal programs that will benefit from enhancements to the portal, it will need to revisit and adjust its cost allocation plan.? We asked again for documentation, such as internal planning documents, to support that these were the only four programs benefiting from this stage of the project. The Agency replied that it did not have the documentation at this time. The iServe IAPD H971 ? Shared cost center allocated $6,019,121 for the quarter ended June 30, 2022. We were unable to determine questioned costs as we were not able to determine which Federal and State program should receive an allocation, and the basis for how the costs would be allocated to these programs. Cause: Inadequate procedures to ensure that system reports were set up correctly, employees coded their time correctly, and allocations were adequately supported and calculated correctly. Effect: Without adequate documentation to support the allocation of costs, there is increased risk of programs not being charged the proper amounts. Recommendation: We recommend the Agency improve procedures to ensure that employee pay is recorded correctly in E1, system reports are set up correctly, and costs are properly allocated and charged. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance to Needy Families; AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.658 ? Foster Care Title IV-E ? Allowable Cost/Cost Principles Grant Number & Year: 1901NETANF, FFY 2019; 2101NEFOST, FFY 2021; 2201NEFOST, FFY 2022; 202121S251443, FFY 2021; 202222S251443, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 200.303 (January 1, 2022): The non-Federal entity must: (a) Establish and maintain effective internal control the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per the CAP, ?The RMTS Administrator is an employee of the Division of Children and Family Services and is responsible for . . . . verification that all forms are submitted to the Completed Surveys database, review of the worker entries to validate consistent practice among participants . . . .? Per the CAP, ?Each worker should be trained in the completion of the observation form and to the importance of providing accurate and timely responses.? According to RMTS Explanations: 1. Case Work ? Select this item if you were working on a specific case at the observation time. If you select this item you will be asked to enter the NFOCUS master case number. If there is not an NFOCUS master case, use any other number or description that can be used to identify the case . . . . According to the RMTS Instructions for the Worker: ?After the observation form has been submitted and validated (if selected for validation), it is reviewed by a member of the CFS and Cost Accounting Office for consistency.? According to the RMTS Instructions for the Supervisor: ?If you agree with the worker?s selections, you can click the ?VALIDATION? button. If you do not agree with the worker?s selections, you need to confer with the worker on the selection process and reach agreement on the proper selections for the form. Make updates as needed, and click the ?VALIDATION? button to attach the supervisor?s electronic signature and validate the form.? Good internal control and sound accounting practices require procedures to ensure that staff know how to complete accurate random moment time studies, which are used to allocate costs to Federal programs. Condition: The Agency did not have adequate procedures to ensure the accuracy of the RMTS. A similar finding was noted in the prior audit. Repeat Finding: 2021-033 Questioned Costs: $14,131 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The RMTS is conducted on an ongoing basis to provide data for the allocation of direct and indirect costs to various programs. The objective is to identify employee efforts directly related to programs administered by the Agency. We tested 48 validated RMTS observations and noted that inadequate documentation was provided on 11 of them. We noted the following: ? For two of four Foster Care IV-E observations tested, the observations should have been reported as Foster Care Non IV-E per the documentation in the case files. For one of these observations, the case worker noted in the comments that she selected the wrong option. However, it was still validated without correction. ? For five of 21 SNAP observations tested, the RMTS observation form appeared to have been completed incorrectly by the case worker. For two of these observations, the case worker selected the SNAP program; however, per the case files, the case worker appeared to be working on other programs along with SNAP at the time of the observation or was not working on SNAP at all at the time of the observation. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. For the other three observations, the case workers did not document which cases they were working on. ? For four of 12 TANF observations tested, the RMTS observation forms appeared to have been completed incorrectly by the case workers. The case workers selected the TANF program; however, per the case files, the case workers appeared to be working on other programs along with TANF at the time of the observation, or, for one case, not working on TANF at all. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. Total known Federal payment errors, amount tested, error rate (amount of errors/ amount tested), total dollars charged via RMTS, and potential dollars at risk (dollar rate multiplied by the population total dollars charged) are summarized below by program: See Schedule of Findings and Questioned Costs for chart/table. The APA also inquired with Agency staff to determine if they were provided training in how to complete the random moment time studies. For one individual, the Agency was unable to provide documentation to support that the employee selected had completed RMTS training. Cause: The Agency?s training of staff and supervisory reviews of RMTS observations were not sufficient to ensure the observations were accurately completed. Effect: Random moment sampling is based on the laws of probability, which state, in essence, that there is a high probability that a relatively small number of random observations will yield an accurate depiction of the overall characteristics of the population for which the sample was taken. If RMTS observations are not accurate, there is an increased risk costs will be allocated incorrectly between programs. Recommendation: We recommend the Agency improve procedures to ensure that random moment observations are accurate and adequately reviewed. Management Response: The Agency agrees.
Program: AL 12.400 ? Military Construction, National Guard ? Suspension and Debarment Grant Number & Year: W91243-18-2-2001, FFY 2018; W91243-19-2-2001, FFY 2019 Federal Grantor Agency: U.S. Department of Defense Criteria: 2 CFR ? 180.300 (January 1, 2022) provides, in relevant part, the following: When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM [System for Award Management] Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Section 101.d of the State?s Military Construction Cooperative Agreements (MCCA) with the National Guard Bureau (NGB) states, ?Although this MCCA is not an appendix to the Master Cooperative Agreement (MCA) (October 2015 revision) which includes Attachment A thereto, the terms of the MCA are incorporated herein by reference. The MCA contains provisions required by federal law and regulation which apply to this MCCA and govern it.? Section 808 of the MCCA refers to Section 808 of the MCA for suspension and debarment requirements. Section 808 of the State?s MCA with the NGB provides the following: Non-federal entities and contractors are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The grantee agrees to comply with the DOD implementation of 2 CFR Part 180 (at 2 CFR Part 1125) by checking the Excluded Parties List System (EPLS) at the current OMB website to verify contractor eligibility to receive contracts and subcontracts resulting from this Agreement. The grantee and subrecipients shall not solicit offers from, nor award contracts to contractors listed in EPLS. This verification shall be documented in the grantee and subrecipient contract files, and shall be subject to audit by the grantor and Federal/State audit agencies. A good internal control plan requires adequate procedures to ensure the Agency does not utilize contractors who are barred from participation in Federal programs due to improprieties. Good internal control also requires that procedures performed be adequately documented. Condition: For four of four contractors tested, the Agency did not have documentation on file to support that it verified the contractors were not excluded, suspended, or otherwise debarred from participation in Federal programs. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: The Agency stated that it reviews the SAM website to ensure contractors are not barred from participation in the program. However, the Agency did not have documentation on file to support that the review occurred. The Agency included clauses in its contracts requiring the contractors to verify that subcontractors were not debarred from participation in Federal programs. However, the contracts did not include clauses requiring the contractors to certify they were not debarred from participation in Federal programs. The contractors tested received a total of $21,294,705 in program funds during the fiscal year ended June 30, 2022. We reviewed the SAM website for the contractors tested, and none were excluded by the Federal government. Cause: Inadequate procedures. Effect: Increased risk for loss or misuse of funds. Recommendation: We recommend the Agency implement procedures to ensure it completes documented annual reviews of the SAM website for its contractors. Management Response: The Construction and Facility Maintenance Office concurs with the finding stated above.
Program: AL 12.401 ? National Guard Military Operations and Maintenance (O&M) Projects ? Cash Management & Reporting Grant Number & Year: Appendices ? W91243-20-2-1001, FFY 2020; W91243-21-2-1001, FFY 2021; W91243-21-2-1005, FFY 2021; W91243-21-2-1021, FFY 2021; W91243-22-2-1001, FFY 2022; W91243-22-2-1002, FFY 2022; W91243-22-2-1003, FFY 2022; W91243-22-2-1005, FFY 2022; W91243-22-2-1024, FFY 2022 Federal Grantor Agency: U.S. Department of Defense Criteria: Per 2 CFR ? 1128.100 and 2 CFR ? 1128.200 (January 1, 2022), the Department of Defense adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR parts 200.302, 200.303, and 200.305. Per 2 CFR ? 200.303 (January 1, 2022): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Title 2 CFR ? 200.302 (January 1, 2022) requires financial management systems of the State sufficient to permit both the preparation of required reports and the tracing of funds to expenditures adequate to establish that the use of the funds was in accordance with applicable regulations. EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. Title 2 CFR ? 200.305(a) (January 1, 2022) states, in part, ?For states, payments are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 . . . .? Title 31 CFR Part 205 (July 1, 2021) implements the Cash Management Improvement Act (CMIA) and requires State recipients to enter into agreements that document accepted funding techniques for Federal assistance programs. The CMIA Agreement between the State of Nebraska, Secretary of the Treasury, and U.S. Department of the Treasury, for the period July 1, 2021, through June 30, 2022, allows the program to request Federal funds in accordance with the monthly draw funding technique by which the amount requested shall be based on estimated costs to be incurred in the next month. Master Cooperative Agreement (October 2020), Article V ? Payment, Section 503, Payment by Advance Method, states, ?The advance payment method shall be according to procedures established in current PARC policy, NGR 5-1 Chapter 11 or successor CNGB I & M, and 2 CFR ?200.305.? National Guard Regulation (NGR) 5-1, National Guard Grants and Cooperative Agreements, Section 11-5, Advance Payment Method, Section (5), states in part, ?[T]he grantee agrees to minimize the time elapsing between the transfer of funds from the U.S. Treasury and their disbursement by the State. (no more than 45 days)?. NGR 5-1 was in effect during the entire audit period but has since been superseded by CNGBI 9101.00, which went into effect on January 27, 2023. Instructions for OMB Standard Form 270 (REV. 1/2016) includes the following for line 11a, ?Enter program outlays to date (net of refunds, rebates, and discounts), in the appropriate columns. For requests prepared on a cash basis, outlays are the sum of actual cash disbursements for goods and services, the amount of indirect expenses charged, the value of in- kind contributions applied, and the amount of cash advances and payments made to subcontractors and subrecipients.? A good internal control plan would include procedures to ensure that the time between the drawdown of Federal funds and disbursements are minimized and in compliance with State of Nebraska CMIA Agreement and National Guard Regulations. Condition: The Agency was not in compliance with the Federal cash management requirements during the fiscal year and did not properly report program outlays on the OMB Standard Form (SF) 270. A similar finding was noted in the prior audit. Repeat Finding: 2021-059 Questioned Costs: None Statistical Sample: No Context: We tested 25 drawdowns and noted the following: ? Fourteen drawdowns were not in compliance with NGR 5-1. Ten of the draws were expended from 46 to 334 calendar days after the drawdown of Federal funds. The other four draws had yet to be fully expended as of February 9, 2023. The table below provides a summary of the 14 draws: See Schedule of Findings and Questioned Costs for chart/table. ? In addition, four draws were not in compliance with CMIA Agreement requirements. Advance amounts were requested based on estimated costs to be incurred during the month covered by the requests. To determine the reasonableness of the estimates, the APA determined the time it took the Agency to expend amounts advanced (without consideration of any cash on hand). Four draws were expended between 64 and 110 days after the drawdown of Federal funds. ? For 24 of 25 SF 270?s tested, the Agency did not properly report total program outlays on the OMB SF-270 report. The Military reported the total drawdowns for the program to date, rather than actual cash disbursements, as total program outlays. The variance between what was reported and what should have been reported ranged from an underreporting of $56,356 to an overreporting of $2,310,585, with a net total overreporting of total program outlays by $10,983,232 for the 25 reports tested. Cause: Inadequate procedures for coding funds and estimating cash needs for the upcoming month. The Agency drew down funds from the wrong Federal program. The Agency has recorded expenditures for two capital construction projects dating back to December 2019. The Agency reports expenditures for the projects under the Military Construction program (AL 12.400), stating that the projects are Federally funded under AL 12.400. However, it drew down funds for the projects under AL 12.401. Regarding SF-270 reporting, the Agency thought that the report instructions requiring reporting of actual cash disbursements as total program outlays did not apply to it as an ?advance State? (a State that is authorized to request funds on an advance basis). Effect: The Agency is not in compliance with Federal cash management and reporting requirements, which could result in sanctions. Additionally, there is an increased risk for the loss of Federal funding. Recommendation: We recommend the Agency ensure that the amount of time between the Federal draw and the disbursement of funds by the State is minimized and in compliance with the State of Nebraska CMIA Agreement and National Guard Regulations. We also recommend the Agency report total program outlays in compliance with Federal requirements. Management Response: The United States Property and Fiscal Office (USPFO) concurs with the recommendation.
Program: Various, including AL 84.010 ? Title I Grants to Local Educational Agencies; AL 93.568 ? Low-Income Home Energy Assistance (LIHEAP); and AL 93.659 ? Adoption Assistance ? Cash Management Grant Number & Year: Various Federal Grantor Agency: Various Criteria: 31 CFR ? 205.12 (July 1, 2021) states, in part, the following: (a) We and a State may negotiate the use of mutually agreed upon funding techniques. We may deny interest liability if a State does not use a mutually agreed upon funding technique. Funding techniques should be efficient and minimize the exchange of interest between States and Federal agencies. (b) We and a State may base our agreement on the sample funding techniques listed in paragraphs (b)(1) through (b)(5) of this section . . . . * * * * (3) Average clearance means that a Federal Program Agency, on the dollar-weighted average day of clearance of a disbursement, transfers to a State a lump sum equal to the actual amount of funds that the State is paying out. The dollar-weighted average day of clearance is the day when, on a cumulative basis, 50 percent of the funds have been paid out. The dollar-weighted average day of clearance is calculated from a clearance pattern, consistent with ?205.20. Per 31 CFR ? 205.19(e) (July 1, 2021) states, in part, the following: A State may use actual data, a clearance pattern, or statistical sampling to calculate interest. A clearance pattern used to calculate interest must meet the standards of ? 205.20. Per 31 CFR ? 205.20 (July 1, 2021): States use clearance patterns to project when funds are paid out, given a known dollar amount and a known date of disbursement. A State must ensure that clearance patterns meet the following standards: * * * * (b) A clearance pattern must accurately represent the flow of Federal funds under the Federal assistance programs to which it is applied. Per 31 CFR ? 205.22(b) (July 1, 2021): An authorized State official must certify that a clearance pattern corresponds to the clearance activity of the Federal assistance program which it is applied. An authorized State official must re-certify the accuracy of a clearance pattern at least every five years. . . . A State can begin to use a new clearance pattern on the date the new clearance pattern is certified. Condition: The Agency lacked adequate procedures to ensure that Federal funds were drawn in compliance with the Treasury Service Agreement (TSA). Repeat Finding: No Questioned Costs: N/A Statistical Sample: No Context: Twelve programs for the State use ?Average Clearance? to request Federal funds. For Average Clearance, the funds are requested so that they are deposited on the dollar-weighted average day of clearance for the disbursement. Clearance patterns are recalculated every five years. The Agency uses historical data to determine the number of days each check was outstanding (clearance time). The clearance time is multiplied by the percentage of total disbursements for those checks, and a dollar-weighted average day of clearance is determined by summing the clearance factor for each day. A clearance pattern of 3.43 days would have 57% of funds deposited on day three and 43% deposited on day four. On December 14, 2021, the Agency and the U.S. Department of the Treasury signed the TSA, establishing the Letter of Credit clearance patterns to be used for the period of July 1, 2021, through June 30, 2022. As of the date of the APA?s review in November 2022, however, the Agency had not yet updated the Delay of Draw (DOD) system to reflect these clearance patterns. Consequently, the Agency continued to draw Federal funds using the fiscal year 2021 clearance patterns, some of which were last calculated in fiscal year 2016. The APA identified three Federal programs that were drawing Federal funds at a faster rate than allowed by the TSA. ? AL 84.010 draws funds through multiple DOD #?s, including DOD #0999. DOD #0999 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.43 days for fiscal year 2022. This resulted in the early draw of 43% of AL 84.010 funds drawn through DOD #0999. ? AL 93.568 draws funds through multiple DOD #?s, including DOD #2761. DOD #2761 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.37 days for fiscal year 2022. This resulted in the early draw of 37% of AL 93.568 funds drawn through DOD #2761. ? AL 93.659 draws funds through multiple DOD #?s, none of which were properly updated from a 3-day clearance pattern to the certified clearance pattern of 4.24 days. This resulted in the early draw of AL 93.659 funds by 1.24 days. During testing of 25 Federal deposits, we noted the following: ? For one deposit tested, the Agency drew down $117,779 more in Federal funds than there were recorded as expenditures in E1, the State?s accounting system. The Agency held these funds throughout the fiscal year, continuing to do so until the APA raised concerns about them. See Schedule of Findings and Questioned Costs for chart/table. ? Due to the previously noted error in updating the DOD system, for 2 of 25 Federal draws tested, the APA noted that the Agency drew Federal funds earlier than were allowed under the TSA. As the State would have been entitled to the overdrawn funds the following day, there are no questioned costs. See Schedule of Findings and Questioned Costs for chart/table. Cause: Inadequate review of drawdowns. Agency staff stated that they had not had time to update the clearance patterns in the DOD system. Effect: Without adequate procedures to ensure that Federal drawdowns comply with the TSA, there is an increased risk of noncompliance with Federal requirements, which could lead to interest penalties and sanctions. Recommendation: We recommend the Agency strengthen its procedures for ensuring that clearance patterns are updated in a timely manner to comply with the TSA, and draws are supported by expenditures in the accounting system. Management Response: Management agrees with the finding and has updated clearance patterns to align with the most recent TSA agreement.
Program: AL 84.010 ? Title I Grants to Local Educational Agencies ? Allowability and Subrecipient Monitoring Grant Number & Year: S010A190027, FFY 2020; S010A200027, FFY 2021 Federal Grantor Agency: U.S. Department of Education Criteria: Per 2 CFR ? 3474.1 (January 1, 2022), the U.S. Department of Education adopted the OMB Uniform Guidance in 2 CFR part 200, except for 2 CFR ? 200.102(a) and 200.207(a). Per 2 CFR ? 200.403 (January 1, 2022), allowable costs must be necessary, reasonable, and adequately documented. 2 CFR ? 200.430(i)(1) (January 1, 2022) states, in relevant part, the following: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities . . . . ; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity?s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity . . . . ; and * * * * (vii) Support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Enclosure A of the ?Letter to Chief State School Officers on Granting Administrative Flexibility for Better Measures of Success? (September 7, 2012) provides guidelines for local educational agencies (LEAs), using a substitute system for time-and-effort reporting. Enclosure A states, in relevant part, the following: (3) Employee schedules must: a. Indicate the specific activity or cost objective that the employee worked on for each segment of the employee?s schedule; b. Account for the total hours for which each employee is compensated during the period reflected on the employee?s schedule; and c. Be certified at least semiannually and signed by the employee and a supervisory official having firsthand knowledge of the work performed by the employee. 2 CFR ? 200.332 (January 1, 2022) states, in relevant part, the following: All pass-through entities must: * * * * (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: * * * * (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient . . . . A good internal control plan requires that adequate documentation be maintained to support amounts claimed by and paid to subrecipients. Good internal control also requires procedures to follow up with subrecipients to ensure they are correcting deficiencies and in compliance with applicable regulations. Condition: The Agency lacked procedures to ensure that subrecipients documented their use of Federal awards appropriately. Repeat Finding: No Questioned Costs: $145,101 known (S010A190027, $8,041; S010A200027, $137,060) Statistical Sample: No Context: We randomly selected 25 subrecipient payments and also chose the largest subrecipient payment for testing. We noted the following: ? Several employees? salaries and benefits were included in the reimbursement requests; however, the Agency did not require subrecipients to submit documentation for these expenditures, other than reports from their accountings systems, at the time of reimbursement. We provided the Agency with an opportunity to request documentation from its subrecipients to support that their salaries and benefits expenses were allowable and in accordance with Federal cost principles; however, two of the subrecipients did not provide adequate support to show that their salaries and benefits were allocable to the grant, resulting in $8,041 sample questioned costs and $137,060 non-sample questioned costs. ? The Agency?s procedure is to perform fiscal reviews of each subrecipient at least once every three years. We reviewed the most recent fiscal reviews for the same 26 subrecipients selected for testing above. For five of these reviews, the Agency noted that the subrecipient did not maintain adequate documentation for salaries and benefits. When we inquired with the Agency regarding what had been done to follow up on its findings, the Agency replied that the findings did not require follow-up. Payment errors noted for the sample tested were $8,041. The total sample tested was $1,494,006. Subrecipient aid payments for the fiscal year ended June 30, 2022, totaled $91,043,602. The sample population was $84,396,850 (total population $91,043,602 less $6,646,752 to largest subrecipient that was separately determined to be allowable). Based on the sample tested, the case error rate was 8% (2/25). The dollar error rate for the sample was 0.54% ($8,041/$1,494,006), which estimates the potential dollars at risk for fiscal year 2022 to be $455,753 (dollar rate multiplied by the population). Cause: Inadequate procedures. Effect: Without adequate supporting documentation and monitoring procedures, there is an increased risk that Federal awards could be used for unallowable costs. Recommendation: We recommend the Agency improve procedures to monitor subrecipients, including reviewing detailed supporting documentation for payroll expenses and following up with subrecipients to ensure that they correct errors noted. Management Response: The Department agrees the two subrecipients sampled did not complete one time and effort certification semi-annually (rather completed annually instead) or with all language suggested in the guidelines from the U.S. Department of Education. However, the Department disagrees with the reimbursement being questioned costs as the time and effort certifications demonstrated adequate documentation to support the employees? activities were allowable for the Title I grant. In the absence of this information, the Department submitted affidavits from the two LEA?s supervisory staff with personal knowledge of the work performed consistent with the U.S. Department of Education?s audit resolutions practices; whereas the APA does not consider documentation after the fact to be adequate to eliminate the finding. The findings noted in the subrecipient fiscal monitoring exit letters were identified for technical assistance purposes only and not considered to have met a level of materiality that required a corrective action plan. Corrective action plans are clearly noted in subrecipient fiscal monitoring exit letters when issued and proper follow-up action is taken when this occurs. Technical assistance was provided to each of the subrecipients at the time of the monitoring review as well as to all subrecipients periodically throughout the year. APA Response: Per the Uniform Guidance, questioned costs include expenditures that lack adequate supporting documentation at the time of the audit. 2 CFR ? 200.430(i)(1) (January 1, 2022), as referenced in the report comment, says that such documentation must ?accurately reflect the work performed? and be ?supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.? Affidavits dated February 27, 2023, some 18 months after the salary and benefit expenses occurred, cannot possibly satisfy either of these requirements and are, therefore, not acceptable. As the documentation provided did not meet the minimum requirements set forth in Uniform Guidance and guidance issued by the U.S. Department of Education, the expenditures at issue must be considered questioned costs. Moreover, the Uniform Guidance requires the Agency, as the pass-through entity, to ensure that the subrecipient takes timely and appropriate action to address deficiencies identified not only during audits but also from the Agency?s own reviews. The Agency has noted issues similar to those addressed by the APA ? namely, that the subrecipients have lacked adequate supporting documentation for salary and benefit expenses. The Agency performs subrecipient fiscal monitoring for most subrecipients only every third year. Thus, effective follow-up procedures, as required by 2 CFR ? 200.332 (January 1, 2022), are needed to ensure that subrecipients implement the technical assistance provided by the Agency.
Program: AL 93.069 ? Public Health Emergency Preparedness (PHEP); AL 93.889 ? National Bioterrorism Hospital Preparedness Program (HPP) ? Allowability & Subrecipient Monitoring Grant Number & Year: NU90TP922039, Project Period through 6/30/2024; U3REP190555C, Project Period through 6/30/2024; U3REP190555B, Project Period through 6/30/2024 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.352(d) (October 1, 2021) requires a pass-through entity 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.? 45 CFR ? 75.302(a) (October 1, 2021) requires the State to have accounting procedures sufficient to allow for ?the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.? Good internal control requires procedures to ensure financial activity is properly recorded in the accounting system. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. A good internal control plan requires procedures to ensure subrecipients comply with applicable cost principles. 45 CFR ? 75.405(a) (October 1, 2021) states the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. 45 CFR ? 75.430(i)(1) (October 1, 2021) states, in part, the following: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; * * * * (vii) Support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards . . . . 45 CFR ? 75.431(c) (October 1, 2021) states the following: The cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker's compensation insurance (except as indicated in ? 75.447); pension plan costs (see paragraph (i) of this section); and other similar benefits are allowable, provided such benefits are granted under established written policies. Such benefits, must be allocated to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities, and charged as direct or indirect costs in accordance with the non-Federal entity's accounting practices. A good internal control plan requires procedures to ensure salaries and wages charged to subawards are properly documented, and payments made to subrecipients apply to work performed under the subaward project description. Condition: Subrecipient monitoring procedures were inadequate. A similar finding has been noted in prior audits since 2014. Repeat Finding: 2021-035 Questioned Costs: $221,944 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The Agency made 213 aid payments, totaling $5,444,562, during the fiscal year ended June 30, 2022. This included payments to 32 subrecipients. Subrecipient reimbursement requests include an invoice and Budget Workbook showing expenses by category; however, no source documentation, such as invoices and timesheets, were submitted. The Agency has subrecipient monitoring procedures that include financial monitoring, such as desk reviews; however, no financial monitoring was performed during the fiscal year. We selected a sample of 22 payments, totaling $721,921, and offered the Agency the opportunity to gather supporting documentation from subrecipients. Documentation submitted was not adequate for 16 of 22 payments tested. We noted the following: ? Thirteen payments lacked adequate documentation to support that payroll and fringe benefits charged to the grant were allowable and in accordance with Federal cost principles. In some cases, timesheets were not provided. In other cases, timesheets were provided, but there was not adequate documentation to support the employees? salaries or benefits received. ? Six payments did not have adequate documentation to support non-payroll charges. o Allocated costs for facilities, phones, storage, and other charges did not have adequate support for the amount allocated to the grant. For example, the cost of an audiovisual system for the subrecipient?s conference room was charged 53.8% to the PHEP grant, which did not appear reasonable given that only 0.5 FTE was charged to the grant. The subrecipient indicated that funds were pulled from PHEP because PHEP had money left to spend. This is not allowable, as Federal cost principles require costs to be charged in accordance with the relative benefits received. o We also noted a contract that was not charged at the hourly rate per contract terms, and various travel charges that were not supported. Aid payments for the fiscal year ended June 30, 2022, totaled $5,444,562. Federal payment errors noted were $221,944. The total sample tested was $721,921. The dollar error rate for the sample was 30.74%. This estimates the potential dollars at risk for the fiscal year to be $1,673,658 (dollar error rate multiplied by the population). Cause: The Agency?s procedures for subrecipient monitoring were not followed. Effect: Without adequate subrecipient monitoring procedures, there is an increased risk for the misuse of Federal funds and noncompliance with Federal regulations. Recommendation: We recommend the Agency perform adequate subrecipient monitoring to ensure both the allowability of costs and adherence to Federal regulations. Management Response: The Department partially agrees with the condition. The FTE position with primary monitoring responsibilities for the PHEP and HPP program areas was vacant during this period, restricting the degree of financial monitoring performed. While there were costs within the APA?s sample which appear inadequately supported by subrecipient records, there are included in APA?s questioned costs examples of payroll costs which DHHS believes it will receive partial or complete support for. The Department will work with subrecipients to determine which costs have additional support and which do not. For costs ultimately found unsupported, it will request repayment. APA Response: As noted above, no financial monitoring was performed by the Agency during the fiscal year. The Agency was allowed over three weeks to obtain documentation from the subrecipients; however, $221,944 of the sample remained unsupported.
Program: AL 93.069 ? Public Health Emergency Preparedness ?Matching and Reporting Grant Number & Year: NU90TP922039-02, Budget Period through 6/30/2021 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.302(a) (October 1, 2021) states the following: Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non- Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.306(b) (October 1, 2021) states, in part, the following: For all Federal awards, any shared costs or matching funds and all contributions, including cash and third party in-kind contributions, must be accepted as part of the non-Federal entity?s cost sharing or matching when such contributions meet all of the following criteria: * * * * (3) Are necessary and reasonable for accomplishment of project or program objectives; (4) Are allowable under subpart E of this part; 45 CFR ? 75.403(a) requires costs to be ?necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.? 45 CFR ? 75.405(a) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. 45 CFR ? 75.430(i)(1) states, in part, the following: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: * * * * (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. A good internal control plan requires procedures to ensure the adequacy of documentation to support that matching funds are in accordance with Federal requirements. Condition: The Agency lacked documentation to support the amount of matching funds provided and reported on the annual Federal Financial Report. A similar finding was noted in the prior audit. Repeat Finding: 2021-036 Questioned Costs: Unknown Statistical Sample: No Context: For the NU90TP922039-02 grant, the Agency reported $8,666,524 in Federal grant expenditures and $866,652 in State matching expenditures. The matching expenditures included State General Fund payroll expenditures for various employees. The Agency lacked adequate documentation to support the salary percentages used for PHEP matching. We reviewed the four employees with over $100,000 included in PHEP matching, as detailed in the following table: See Schedule of Findings and Questioned Costs for chart/table. Based on their job titles, it appears unreasonable for any of the four employees to have spent so much of their time solely on PHEP activities. Cause: Inadequate procedures Effect: Non-compliance with Federal requirements, which could lead to Federal sanctions. Recommendation: We recommend the Agency implement procedures to ensure matching amounts are adequately supported and in accordance with Federal requirements. Management Response: The Agency does not agree. The sample included in this finding does not align with the match currently reported for PHEP budget period 2 on the Department's federal financial reporting. The Department achieved the 10% match requirement in BP2 with unrecovered indirect costs under two subawards with UNMC, which has been documented and approved by the federal partner. Only one of the staff included in APA's sample is claimed as match in any period for PHEP. Angela Ling served as DHHS Incident Commander exclusively during the COVID-19 pandemic. This position reported directly to the DHHS CEO and had direct supervisory authority over PHEP. DHHS provided a job description for this role, which the Department views as 100% in alignment with PHEP domains for the duration of the COVID-19 pandemic. For these reasons, the state-supported payroll costs of this position were included in the state's 10% match documentation for BP3. APA Response: Unrecovered indirect costs by the University of Nebraska Medical Center (UNMC) would cover only $427,977 of the $866,652 match, leaving $438,675 still needed. The job description for the Incident Commander refers to ?Incidents? without specifying whether any such event would pertain solely to a public health emergency. The Incident Commander is charged to both Program 261, which is General Operations, and the same Business Unit as the Chief Information Officer, which would not be exclusively public health emergency. Also, there are no timesheets to support that the Incident Commander was working specifically on public health emergencies. Furthermore, the Incident Commander would cover only $129,551, leaving $309,124 still unsupported. There are no time records supporting the salary percentages used for matching.
Program: AL 93.069 ? Public Health Emergency Preparedness (PHEP); AL 93.889 ? National Bioterrorism Hospital Preparedness Program (HPP) ? Allowability & Subrecipient Monitoring Grant Number & Year: NU90TP922039, Project Period through 6/30/2024; U3REP190555C, Project Period through 6/30/2024; U3REP190555B, Project Period through 6/30/2024 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.352(d) (October 1, 2021) requires a pass-through entity 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.? 45 CFR ? 75.302(a) (October 1, 2021) requires the State to have accounting procedures sufficient to allow for ?the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.? Good internal control requires procedures to ensure financial activity is properly recorded in the accounting system. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. A good internal control plan requires procedures to ensure subrecipients comply with applicable cost principles. 45 CFR ? 75.405(a) (October 1, 2021) states the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. 45 CFR ? 75.430(i)(1) (October 1, 2021) states, in part, the following: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; * * * * (vii) Support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards . . . . 45 CFR ? 75.431(c) (October 1, 2021) states the following: The cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker's compensation insurance (except as indicated in ? 75.447); pension plan costs (see paragraph (i) of this section); and other similar benefits are allowable, provided such benefits are granted under established written policies. Such benefits, must be allocated to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities, and charged as direct or indirect costs in accordance with the non-Federal entity's accounting practices. A good internal control plan requires procedures to ensure salaries and wages charged to subawards are properly documented, and payments made to subrecipients apply to work performed under the subaward project description. Condition: Subrecipient monitoring procedures were inadequate. A similar finding has been noted in prior audits since 2014. Repeat Finding: 2021-035 Questioned Costs: $221,944 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The Agency made 213 aid payments, totaling $5,444,562, during the fiscal year ended June 30, 2022. This included payments to 32 subrecipients. Subrecipient reimbursement requests include an invoice and Budget Workbook showing expenses by category; however, no source documentation, such as invoices and timesheets, were submitted. The Agency has subrecipient monitoring procedures that include financial monitoring, such as desk reviews; however, no financial monitoring was performed during the fiscal year. We selected a sample of 22 payments, totaling $721,921, and offered the Agency the opportunity to gather supporting documentation from subrecipients. Documentation submitted was not adequate for 16 of 22 payments tested. We noted the following: ? Thirteen payments lacked adequate documentation to support that payroll and fringe benefits charged to the grant were allowable and in accordance with Federal cost principles. In some cases, timesheets were not provided. In other cases, timesheets were provided, but there was not adequate documentation to support the employees? salaries or benefits received. ? Six payments did not have adequate documentation to support non-payroll charges. o Allocated costs for facilities, phones, storage, and other charges did not have adequate support for the amount allocated to the grant. For example, the cost of an audiovisual system for the subrecipient?s conference room was charged 53.8% to the PHEP grant, which did not appear reasonable given that only 0.5 FTE was charged to the grant. The subrecipient indicated that funds were pulled from PHEP because PHEP had money left to spend. This is not allowable, as Federal cost principles require costs to be charged in accordance with the relative benefits received. o We also noted a contract that was not charged at the hourly rate per contract terms, and various travel charges that were not supported. Aid payments for the fiscal year ended June 30, 2022, totaled $5,444,562. Federal payment errors noted were $221,944. The total sample tested was $721,921. The dollar error rate for the sample was 30.74%. This estimates the potential dollars at risk for the fiscal year to be $1,673,658 (dollar error rate multiplied by the population). Cause: The Agency?s procedures for subrecipient monitoring were not followed. Effect: Without adequate subrecipient monitoring procedures, there is an increased risk for the misuse of Federal funds and noncompliance with Federal regulations. Recommendation: We recommend the Agency perform adequate subrecipient monitoring to ensure both the allowability of costs and adherence to Federal regulations. Management Response: The Department partially agrees with the condition. The FTE position with primary monitoring responsibilities for the PHEP and HPP program areas was vacant during this period, restricting the degree of financial monitoring performed. While there were costs within the APA?s sample which appear inadequately supported by subrecipient records, there are included in APA?s questioned costs examples of payroll costs which DHHS believes it will receive partial or complete support for. The Department will work with subrecipients to determine which costs have additional support and which do not. For costs ultimately found unsupported, it will request repayment. APA Response: As noted above, no financial monitoring was performed by the Agency during the fiscal year. The Agency was allowed over three weeks to obtain documentation from the subrecipients; however, $221,944 of the sample remained unsupported.
Program: AL 93.323 - COVID-19 Epidemiology & Laboratory Capacity for Infectious Diseases ? Allowability & Subrecipient Monitoring Grant Number & Year: NU50CK000547-02-03, project period ending 7/31/24; NU50CK000547-01-05, project period ending 7/31/24 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Good internal control requires procedures to ensure payments are allowable and in accordance with contract provisions and Federal requirements. Sound accounting practices and a good internal control plan require that contracts terms be specific, and agencies hold contractors accountable to the contractual terms. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. 45 CFR ? 75.404 (October 1, 2021) states the following: A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Subaward 56800 (signed 09/2020), Section 2.4, ?BUDGET CHANGES,? states, in part, the following: If funds are reassigned between line items, prior approval from DHHS is required for cumulative budget transfer requests for costs exceeding fifteen percent (15%) of the current total approved budget. Budget revision requests shall be submitted in writing to DHHS. DHHS will provide written notification of approval or disapproval of the request within thirty (30) days of its receipt. 45 CFR ? 75.302(a) (October 1, 2021) requires the State to have accounting procedures sufficient to allow for ?the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.? 45 CFR ? 75.352(d) (October 1, 2021) requires a pass-through entity 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.? The contract with North End Teleservices (North End) for contact tracing services required all contract employees providing services to complete approved Health Insurance Portability and Accountability Act of 1996 (HIPAA) and privacy training. Condition: The Agency lacked adequate documentation to support that Epidemiology & Laboratory Capacity for Infectious Diseases (ELC) expenditures were allowable and in accordance with Federal requirements. Repeat Finding: 2021-038, 2021-039 Questioned Costs: $804,686 known (NU50CK000547-02-03, $770,515; NU50CK000547-01-05, $34,171) Statistical Sample: No Context: ELC expenditures for the fiscal year totaled $46,707,314, of which $42,444,330 was for payments greater than $50,000. We randomly selected 15 of 148 transaction lines over $50,000 for testing and noted that seven payments tested were not adequately supported. We also tested the two largest journal entries. We noted the following: ? The State was paying a surcharge on services by Nomi Health regarding the COVID-19 testing sites. The State paid service and management fees to Nomi Health that were not outlined in the contract, nor was any amount or percentage of costs agreed upon in the contact. Among six invoices reviewed, $4,186,297 was paid to Nomi Health. Of this amount, $588,582 was for management and service fees. Without contractual language defining these costs, there is not adequate support that the costs are reasonable, necessary, or allowable for the grant. ? For two payments tested to a COVID-19 test kit supplier, there was not adequate support on file to provide assurance that all the test kits ordered were received. Between the two payments, 825 boxes of tests were ordered, costing $201.01/box. The Agency was able to provide a delivery confirmation spreadsheet with tracking numbers that confirmed delivery of a shipment; however, there was no support to show the number of tests or boxes of tests received. Therefore, we question both payments, totaling $165,833. ? The State entered a contract with Ford Storage for providing warehousing, order fulfillment, inventory, and shipping services of personal protective equipment (PPE) and COVID tests. We tested one month?s payment for storage and services. The invoice included $128,800 for storage of 7,001-8,000 pallets for the month; however, the support provided by the Agency was for only 6,730 pallets, which should have been charged at $112,700. Therefore, we question $16,100. The Agency noted that it was working through contractual performance issues with the contractor, including noncompliance on inventory tracking; lack of timely order shipping/delivery; lack of timely response to communications; and concerns regarding the quality of inventory storage. The Agency also noted that payments have been withheld after the June 2022 invoice. Payments made to this contractor under the ELC program during the fiscal year totaled $2,418,470. ? For one subrecipient payment tested, the Agency was reimbursing a Local Health District (LHD) for work related to COVID-19 contact tracing. The subaward was to cover costs of hiring contact tracers for COVID-19 cases in the LHD?s service area. The approved subaward budget included wages and benefits. The payment tested reimbursed the LHD for wages and benefits of $22,459 and contract costs of $34,171. The contract was between the LHD and a Local Community Health Center to provide disease investigators, which was consistent with the purpose of the subaward. However, no additional review or monitoring appears to have been completed to support that the costs were accurate, allowable, in accordance with the contract, and agreed to LHD financial records. Therefore, we question $34,171. Additionally, contractual payments were not included on the original budget of the subaward, which totaled $80,000 of the $240,000 subaward, which is well over the 15% threshold. The Agency confirmed that no amendments to the subaward budget were approved in writing. ? We tested one payment to North End Teleservices for contact tracing services. The vendor provided a spreadsheet with hours worked, related to the invoice period, but did not include any employee identifiers. Because no employee identification was provided for the contact tracers, it was impossible to determine if those workers had completed required HIPAA training. Questioned costs for the random sample amounted to $328,572, and the total sample tested was $3,201,222. The dollar error rate for the sample was 10.26%, which estimates the potential dollars at risk for the fiscal year to be $4,354,788 (dollar error rate multiplied by sample population). We noted an additional $476,114 questioned costs on journal entries tested. Cause: Inadequate control procedures over contractual payments and subrecipient monitoring. The COVID-19 pandemic led the program to managing unprecedented amounts of PPE and test kits shipments and inventory. Verbal arrangements were made with contractors and subrecipient awardees, but those agreements were never put in writing. Effect: Without adequate controls, there is an increased risk for misuse of funds and abuse or fraud to occur. Recommendation: We recommend the Agency implement procedures to ensure that costs are necessary, reasonable, and in accordance with Federal requirements and contract provisions. Management Response: The Agency partially agrees with the finding. The Nomi contract was originally executed through an emergency procurement process by the Agency of Administrative Services in April 2020. State emergency response needs rapidly evolved throughout 2020. Amendment 2, section 2.2.7.h incorporated updated needs and an expansion of scope of this contract, including but not limited to the provision of temporary structures for testing and call center services. This amendment notes that these services were variable. The management fees associated with this work were to cover Nomi?s support and coordination services. While the contractual language could have been more explicit in this respect, the Agency considers these costs reasonable and necessary for the performance of the expanded testing site services, the allowable activity included within the ELC cooperative agreement budget. The Agency retained records of test kit counts included in purchase orders and associated shipping confirmations from the vendor. Test counts included on the bills of lading align with the counts and shipments included on the delivery confirmation spreadsheet noted above The Agency agrees that no formal amendment had been made to the Local Health District (LHD) subaward to explicitly approve the local health Agency to contract with a local hospital for staff support the project, however, all work performed was consistent with the subaward?s purpose and is allowable under the ELC cooperative agreement. With this information provided, we believe $788,586 of the questioned costs to be allowable. APA Response: Regarding the Nomi Contract, as noted above, the additional service and management fees were paid on top of the costs outlined in the Agency-referenced ?Amendment 2, section 2.2.7.h? and were not defined in writing. Without documentation detailing the services received, we could not determine that the $588,582 was reasonable. The delivery confirmation for the test kits did not include the number of tests received, so $165,833 remains questioned. For the subaward payment, there was no review or monitoring performed of the $34,171 to support that the costs were allowable and in accordance with Federal requirements. The question of allowability for these items remains.
Program: Various, including AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.558 ? Temporary Assistance for Needy Families; AL 93.566 ? Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 ? Child Care and Development Block Grant ? Allowable Costs/Cost Principles Grant Number & Year: Various, including 202121S251443, FFY 2021; 202222S251443, FFY 2022; 1901NETANF, FFY 2019; 2101NERCMA, FFY 2021; 2201NERCMA, FFY 2022; 2201NECCDD, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303 (October 1, 2021) states, in relevant part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be necessary, reasonable, and adequately documented. 45 CFR ? 75.302 (October 1, 2021) requires financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 400.1 (January 1, 2022), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. 2 CFR ? 200.303 (January 1, 2022) states, in part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. 45 CFR ? 75.511(b) and 2 CFR ? 200.511(b) (January 1, 2022) state, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that amounts charged to Federal programs are proper. Condition: The Agency did not properly charge Federal programs for seven allocations tested. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-031, 2021-032 Questioned Costs: $44,356 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For seven of 14 allocations tested, we noted the following: ? We tested the allocation of cost center 25C21940 Field Office Resource Development for the quarter ended September 30, 2021, which is allocated based on Time & Effort reports. The payroll costs for 85 employees were charged to the cost center; however, four of the employees? payroll costs should not have been charged to the cost center. The four employees tested included a Federal Aid Administrator, a Program Accuracy Specialist, and two Office Specialists. The supervisors they worked with were not charged to this cost center, and the employees were not employed as Resource Developers, which was the job title of most of the employees included in this cost center. As a result of these employees being charged to the Resource Development cost center instead of their appropriate cost centers, Child Care and Development, Foster Care, Adoption Assistance, Guardianship Assistance, and Medicaid were not charged correctly, ranging from undercharges of $2,653 to overcharges of $2,402. Additionally, we were unable to determine how the payroll costs of $9,858 to the Federal Aid Administrator should have been allocated. The Resource Development cost center allocated $1,444,162 for the quarter ended September 30, 2021. A similar finding was noted in the prior audit. ? We tested the allocation of cost center 25C20680 Legal Services General Legal Teams for the quarter ended June 30, 2022, which is allocated based on Time & Effort reports. The payroll costs for a Legislative Coordinator were recorded to this cost center during the quarter. However, these costs should have been recorded to cost center 25C20720 Communications and Legislative Services Administration. As a result, this employee?s payroll costs of $15,777 during the quarter were not allocated to Federal programs correctly. We were unable to determine how these payroll costs should have been allocated. The Legal Services General Legal Teams cost center allocated $1,332,052 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21960 Field Office Social Services Casework for quarter ended September 30, 2021, which is allocated based on random moment time studies (RMTS) results. The Bridges to Independence program and Guardianship Assistance program should have been allocated $1,464 each from this cost center; however, the Agency did not include these programs in the allocation. As a result, the Federal grants for Refugee and Entrant Assistance, Child Care and Development, Foster Care, Adoption Assistance, Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Medicaid were overcharged, ranging from $3 to $982, and the Guardianship Assistance grant was undercharged $732. The Field Office Social Services Casework cost center allocated $8,099,617 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C21920 Field Office Child Protection & Safety Services for the quarter ended June 30, 2022, which is allocated based on RMTS results. The Agency began using a new RMTS system in January 2022; however, the Agency did not set up the quarterly summary reports correctly. Below are the issues noted: o RMTS observations for Trial Home Visits were not included in the allocation. As a result, State programs were undercharged, and Federal programs were overcharged. o The RMTS observations for Child Protection Initial Assessment were not properly allocated. As a result, Foster Care was overcharged, and Adoption and Guardianship were undercharged. o The RMTS observations for Before or After Work Hours were incorrectly included in the State?s allocation. As a result, Federal programs were undercharged. In total, Federal grants for Adoption Assistance, Foster Care, and Guardianship Assistance were undercharged $28,560, $113,762, and $1,990, respectively. The Field Office Child Protection & Safety Services cost center allocated $12,429,881 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21910 Field Office Administration for the quarter ended June 30, 2022, which is allocated based on labor hours. The Agency did not include all of the applicable labor hours for the Medicaid program. As a result, the Federal grants for Adoption Assistance, Foster Care, Guardianship Assistance, Refugee and Entrant Assistance, Child Care and Development, TANF, and SNAP were overcharged, ranging from $265 to $30,556, and the Medicaid grant was undercharged $235,906. The Field Office Administration cost center allocated $3,236,547 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C20990 IST Application NFOCUS Applications for the quarter ended September 30, 2021, which is allocated based on client counts per NFOCUS/MMIS reports. We noted that the Foster Care and TANF recipient counts used in the allocation did not agree to support. The Foster Care count included 71 clients that were paid with State funds, resulting in $265 being overcharged to the Foster Care grant, and the TANF count included 48 clients that were paid with State funds, resulting in $358 being overcharged to the TANF grant. Additionally, we were unable to trace the member counts to documentation that supported allocating $1,853,284 to Medicaid and $283,190 to the Children?s Health Insurance Program (CHIP). The Agency did not maintain the member count reports used at the time of the allocation. The Agency was able to generate a historical report; however, while the report amounts were similar, they did not agree with the counts used in the allocation. The Agency did maintain system summary reports at the time of the allocation, and the total counts on the summary reports did agree to amounts used for the allocation. However, as the summary reports used did not maintain the detail of members counted, we could not verify the accuracy of the reports used. The IST Application Services NFOCUS Applications cost center allocated $3,800,340 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C23823 iServe IAPD H971 ? Shared for the quarter ending June 30, 2022. The Agency is developing the new iServe Nebraska Portal, which is an application for Nebraskans to apply for benefits from Federal and State programs. This application will be replacing ACCESSNebraska, the current application used by Nebraskans to apply for benefits. For the implementation phase of the project, the Agency was only allocating costs to the following four programs: LIHEAP, TANF, SNAP, and Medicaid. However, there are other Federal and State programs that will utilize the iServe application. We asked for documentation to support that these were the only four programs that were benefiting from this stage of the project. The Agency provided correspondence from its Federal contacts, which stated: ?As long as SNAP, Medicaid, LIHEAP, and TANF are the only benefiting programs for the State?s iServe Nebraska Portal project, the State may just include these four programs in the development of its cost allocation plan. If/when the State decides to add other Federal programs that will benefit from enhancements to the portal, it will need to revisit and adjust its cost allocation plan.? We asked again for documentation, such as internal planning documents, to support that these were the only four programs benefiting from this stage of the project. The Agency replied that it did not have the documentation at this time. The iServe IAPD H971 ? Shared cost center allocated $6,019,121 for the quarter ended June 30, 2022. We were unable to determine questioned costs as we were not able to determine which Federal and State program should receive an allocation, and the basis for how the costs would be allocated to these programs. Cause: Inadequate procedures to ensure that system reports were set up correctly, employees coded their time correctly, and allocations were adequately supported and calculated correctly. Effect: Without adequate documentation to support the allocation of costs, there is increased risk of programs not being charged the proper amounts. Recommendation: We recommend the Agency improve procedures to ensure that employee pay is recorded correctly in E1, system reports are set up correctly, and costs are properly allocated and charged. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance to Needy Families; AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.658 ? Foster Care Title IV-E ? Allowable Cost/Cost Principles Grant Number & Year: 1901NETANF, FFY 2019; 2101NEFOST, FFY 2021; 2201NEFOST, FFY 2022; 202121S251443, FFY 2021; 202222S251443, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 200.303 (January 1, 2022): The non-Federal entity must: (a) Establish and maintain effective internal control the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per the CAP, ?The RMTS Administrator is an employee of the Division of Children and Family Services and is responsible for . . . . verification that all forms are submitted to the Completed Surveys database, review of the worker entries to validate consistent practice among participants . . . .? Per the CAP, ?Each worker should be trained in the completion of the observation form and to the importance of providing accurate and timely responses.? According to RMTS Explanations: 1. Case Work ? Select this item if you were working on a specific case at the observation time. If you select this item you will be asked to enter the NFOCUS master case number. If there is not an NFOCUS master case, use any other number or description that can be used to identify the case . . . . According to the RMTS Instructions for the Worker: ?After the observation form has been submitted and validated (if selected for validation), it is reviewed by a member of the CFS and Cost Accounting Office for consistency.? According to the RMTS Instructions for the Supervisor: ?If you agree with the worker?s selections, you can click the ?VALIDATION? button. If you do not agree with the worker?s selections, you need to confer with the worker on the selection process and reach agreement on the proper selections for the form. Make updates as needed, and click the ?VALIDATION? button to attach the supervisor?s electronic signature and validate the form.? Good internal control and sound accounting practices require procedures to ensure that staff know how to complete accurate random moment time studies, which are used to allocate costs to Federal programs. Condition: The Agency did not have adequate procedures to ensure the accuracy of the RMTS. A similar finding was noted in the prior audit. Repeat Finding: 2021-033 Questioned Costs: $14,131 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The RMTS is conducted on an ongoing basis to provide data for the allocation of direct and indirect costs to various programs. The objective is to identify employee efforts directly related to programs administered by the Agency. We tested 48 validated RMTS observations and noted that inadequate documentation was provided on 11 of them. We noted the following: ? For two of four Foster Care IV-E observations tested, the observations should have been reported as Foster Care Non IV-E per the documentation in the case files. For one of these observations, the case worker noted in the comments that she selected the wrong option. However, it was still validated without correction. ? For five of 21 SNAP observations tested, the RMTS observation form appeared to have been completed incorrectly by the case worker. For two of these observations, the case worker selected the SNAP program; however, per the case files, the case worker appeared to be working on other programs along with SNAP at the time of the observation or was not working on SNAP at all at the time of the observation. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. For the other three observations, the case workers did not document which cases they were working on. ? For four of 12 TANF observations tested, the RMTS observation forms appeared to have been completed incorrectly by the case workers. The case workers selected the TANF program; however, per the case files, the case workers appeared to be working on other programs along with TANF at the time of the observation, or, for one case, not working on TANF at all. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. Total known Federal payment errors, amount tested, error rate (amount of errors/ amount tested), total dollars charged via RMTS, and potential dollars at risk (dollar rate multiplied by the population total dollars charged) are summarized below by program: See Schedule of Findings and Questioned Costs for chart/table. The APA also inquired with Agency staff to determine if they were provided training in how to complete the random moment time studies. For one individual, the Agency was unable to provide documentation to support that the employee selected had completed RMTS training. Cause: The Agency?s training of staff and supervisory reviews of RMTS observations were not sufficient to ensure the observations were accurately completed. Effect: Random moment sampling is based on the laws of probability, which state, in essence, that there is a high probability that a relatively small number of random observations will yield an accurate depiction of the overall characteristics of the population for which the sample was taken. If RMTS observations are not accurate, there is an increased risk costs will be allocated incorrectly between programs. Recommendation: We recommend the Agency improve procedures to ensure that random moment observations are accurate and adequately reviewed. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance for Needy Families (TANF) ? Reporting Grant Number & Year: Various, including 2001NETANF, FFY 2020; 2101NETANF, FFY 2021 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021), the non-Federal agency must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 265.9(a) (October 1, 2021) requires, ?Each State must file an annual report containing information on the TANF program and the State's MOE [maintenance-of-effort] program(s) for that year.? 45 CFR ? 265.9(c) details the information required to be reported for each State program for which the State claims MOE expenditures. Per 45 CFR ? 265.10, the annual report is due at the same time as the fourth quarter TANF Data Report, which is 45 days after the end of the quarter, or November 14. 2 CFR ? 170, Appendix A I. (January 1, 2022) states, in part, the following: a. Reporting of first-tier subawards. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency . . . . . . . . 2. ii. For subaward information, report no later than the end of the month following the month in which the obligation was made. . . . . e. 4. Subaward: i. This term means a legal instrument to provide support for the performance of any portion of the substantive project or program for which you received this award and that you as the recipient award to an eligible subrecipient. . . . . iii. A subaward may be provided through any legal agreement, including an agreement that you or a subrecipient considers a contract. 45 CFR ? 75.211 (October 1, 2021) states the following: (a) In accordance with statutory requirements for Federal spending transparency (e.g., FFATA), except as noted in this section, for applicable Federal awards the HHS awarding agency must announce all Federal awards publicly and publish the required information on a publicly available OMB-designated government-wide Web site (at time of publication, www.USAspending.gov). (b) All information posted in the designated integrity and performance system accessible through SAM (currently FAPIIS) on or after April 15, 2011 will be publicly available after a waiting period of 14 calendar days . . . . Good internal control requires procedures to ensure all required reports are submitted on time. Condition: The ACF204 Report for FFY 2021 was required to be submitted by November 14, 2021; however, it was not submitted until November 8, 2022, after it was requested by the auditors. FFATA reporting was not submitted for the largest TANF subrecipient. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: Federal reports were not submitted as required, as noted below. ACF204 On September 29, 2022, we requested the ACF204 report for FFY 2021. On October 20, 2022, Agency staff responded that they were unable to find the report in the system and it did not appear it was submitted. The Agency subsequently submitted the report on November 8, 2022, and provided it to the auditors, almost one year after the report was due. FFATA For fiscal year ended June 30, 2022, the Agency paid subrecipients $13,735,054, which included $9,459,670 to Equus Workforce Solutions for Employment First service coordination. We tested FFATA reporting for the three largest subrecipients. We noted that no FFATA report was submitted for Equus Workforce Solutions. We reviewed the subaward history, including renewals and amendments. The renewal was signed May 31, 2022, for $20,060,504 for fiscal year 2023, and was due for FFATA reporting by June 30, 2022, but it was not submitted. We also reviewed https://www.usaspending.gov, the public facing website that provides the reported FFATA information, and not only did the Agency fail to report the subaward renewal during our audit period, but also it never reported the subaward in effect for fiscal year ended 2022. Cause: Inadequate procedures to ensure that required reports are submitted by the reporting deadline. There was employee turnover for the ACF204 report. According to Agency staff, the subaward was considered a hybrid contract/subaward and was missed for FFATA reporting. Effect: Noncompliance with Federal requirements, which could lead to sanctions. Recommendation: We recommend the Agency implement procedures to ensure all required reports are submitted timely. We further recommend the implementation of procedures to ensure that all subawards are reported to FFATA accurately and in a timely manner. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance for Needy Families (TANF) ? Allowability & Eligibility Grant Number & Year: 2001NETANF, FFY 2020; 1901NETANF, FFY 2019 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.403 (October 1, 2021), costs must be necessary, reasonable, and adequately documented. Per Nebraska?s Combined State Plan (Program Years 2020-2023): DHHS will use TANF funds to support an array services to assist needy families with children so that children can be cared for in their own homes . . . . The eligibility criteria will be needs based as indicated by the family?s program eligibility status for Aid to Dependent Children (ADC), Supplemental Nutrition Assistance Program (SNAP), SSI or Medicaid. Medicaid eligibility will be based on parent income and not state ward status of an identified child. Per 45 CFR ? 75.302(a) (October 1, 2021): Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds. In addition, the state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR ? 75.303 (October 1, 2021), the non-Federal agency must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Good internal control requires procedures to ensure compliance with Federal regulations. Condition: Child welfare claims paid with TANF funds were not in accordance with State and Federal requirements. Repeat Finding: No Questioned Costs: $5,589 known (2001NETANF, $5,548; 1901NETANF, $41) Statistical Sample: No Context: The State Plan allows for payment of certain child welfare costs from Federal TANF funds. To identify eligible claims the Agency performs a query of the NFOCUS system to pull claims for certain services (e.g., family support services, intensive family preservations and drug testing) for families in an active TANF, SNAP, or Medicaid case or SSI. The Agency transferred $5,596,250 from State general funds to Federal TANF funds for 16,728 claims. We selected 10 claims, totaling $5,760, for testing and noted that one $2,461 claim was not allowable. There was no active TANF, SNAP, or Medicaid case or SSI for the family; therefore, per the State Plan, the family was ineligible. We reviewed the NFOCUS detail and noted 4,000 claims, totaling $1,331,698, charged to TANF identified as no active TANF, SNAP, or Medicaid case. We selected 10 of these claims, totaling $3,128, and reviewed the case eligibility information on NFOCUS. None of the 10 claims tested had an active TANF, SNAP or Medicaid case or SSI for the time of service and were, therefore, not allowable. The known questioned costs for the claims tested was $5,589 ($2,461 + $3,128). The potential dollars at risk is $1,331,698 identified as no active TANF, SNAP, or Medicaid case. Cause: Inadequate review procedures. The NFOCUS details active program cases, but the Agency failed to exclude those cases that were not active for TANF, SNAP, or Medicaid. Effect: Without adequate controls to ensure claims are paid per Federal requirements, there is an increased risk for loss or misuse of funds. Recommendation: We recommend the Agency improve procedures to ensure compliance with the Federal requirements. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance for Needy Families (TANF) ? Allowability & Eligibility Grant Number & Year: 2001NETANF, FFY 2020 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 264.1(a)(1) (October 1, 2021): Subject to the exceptions in this section, no State may use any of its Federal TANF funds to provide assistance (as defined in ? 260.31 of this chapter) to a family that includes an adult head-of-household or a spouse of the head-of-household who has received Federal assistance for a total of five years (i.e., 60 cumulative months, whether or not consecutive). Title 8 U.S.C. Section 1611(a) states that any individual receiving assistance must be a ?qualified alien? or a U.S. citizen. Title 468 NAC 2-002(2)(a) (Rev. July 8, 2014) states a qualified alien is ?An alien who was admitted as a lawful permanent resident (LPR) and has resided in the United States for at least five calendar years from the date of entry or who has worked or can be credited with 40 qualifying quarters of work.? Title 468 NAC 2-20.10A (Rev. January 9, 2017) states, ?TANF received from another state will apply towards the family?s 60-month lifetime limit.? A good internal control plan requires eligibility determinations and payments to be accurate. Condition: One of 25 TANF cash assistance payments tested was not in compliance with State and Federal requirements. Repeat Finding: No Questioned Costs: $849 known Statistical Sample: No Context: For one case tested, verification of eligibility was not documented, resulting in $182 sample questioned costs and $667 in non-sample questioned costs. There was no documentation at the time of the initial application in October 2021 to ensure the parent receiving assistance was a qualified alien. Additionally, the Agency did not verify whether the family received TANF benefits in the state in which they had previously lived. Federal questioned costs in the sample were $182. The total Federal sample tested was $9,456, and the total Federal cash assistance for the fiscal year was $13,954,157. Based on the sample tested, the case error rate was 4% (1/25). The dollar rate for the sample was 1.92% ($182/$9,456), which estimates the potential dollars at risk for fiscal year 2022 to be $267,920 (dollar error rate multiplied by population). Cause: Worker error. Effect: Increased risk that Federal funds will be paid to ineligible individuals. Recommendation: We recommend that the Agency implement procedures to ensure compliance with State and Federal regulations. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance for Needy Families (TANF) ? Reporting Grant Number & Year: 2101NETANF, FFY 2021; 2201NETANF, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.302(a) (October 1, 2021): Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR ? 75.303(a) (October 1, 2021), the non-Federal agency must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 42 USC 611, each State must collect on a monthly basis, and report to the Secretary on a quarterly basis, case record information on the families receiving TANF assistance. 45 CFR ? 265.3(a) (October 1, 2021) states: (1) Each State must collect on a monthly basis, and file on a quarterly basis, the data specified in the TANF Data Report and the TANF Financial Report (or, as applicable, the Territorial Financial Report). (2) Each State that claims MOE expenditures for a separate State program(s) must collect on a monthly basis, and file on a quarterly basis, the data specified in the SSP-MOE Data Report. 45 CFR ? 265.7(a) (October 1, 2021) states: Each State's quarterly reports (the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), and the SSP-MOE Data Report) must be complete and accurate and filed by the due date. TANF Data Report instructions state, in part: For purposes of completing this report, include all TANF eligible families receiving assistance (i.e., families funded under the TANF block grant and State MOE funded TANF families) as families receiving assistance under the State (Tribal) TANF Program. All counts of families and recipients should be unduplicated monthly totals. * * * * Instruction: Enter the number of families receiving assistance under the State (Tribal) TANF Program for each month of the quarter. A. First Month: B. Second Month: C. Third Month: Good internal control requires procedures to ensure reports are accurate, and any issues are resolved in a timely manner. Condition: The Agency was unable to provide a detail of cases to support the Section Three Total Number of Families reported and the Total Number of SSP-MOE Families. Also, issues noted during the Agency?s review were not resolved timely. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: We tested 10 Federal assistance cases reported on the ACF-199 and five State (SSP-MOE) cases reported on the ACF-209 and tested all items identified as key line items on the OMB Compliance Supplement. We also tested the total number of families reported on each report for November 2021 and April 2022. We requested the Agency to provide the detail of unduplicated families for those months. The Agency provided four Notepad text files for each month. The auditor copied the files to Excel and removed duplicate cases; however, the number of families per the Notepad files did not agree to the number of families reported. The auditor also reviewed the State?s general ledger for TANF payments and compared the number of unduplicated payees to the reports. Although some variances might be expected, the number of payees per the general ledger was 5% to 7% less than that in the 199 report and 6% to 13% less than that in the 209 report. See Schedule of Findings and Questioned Costs for chart/table. Program staff review a sample each month of three 199 reports and three 209 reports. Issues noted were sent to the Agency IT staff. One of the issues noted was that closed cases appear on the reports. This issue was noted prior to May 2021 but remained unresolved by the IT staff as of October 2022. In response to our inquiry, the IT Analyst replied on October 31, 2022, ?There are currently 2 separate pending SCR?s documented for research and various fixes to the ACF 199 / 209 reports logic . . . . Target dates for those have not been assigned.? Cause: Adequate resources were not devoted to correcting reporting errors noted. Effect: Increased risk for inaccurate reporting and non-compliance with Federal requirements. Recommendation: We recommend the Agency implement procedures to ensure reports are accurate, and any system issues are resolved in a timely manner. Management Response: The Agency agrees.
Program: Various, including AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.558 ? Temporary Assistance for Needy Families; AL 93.566 ? Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 ? Child Care and Development Block Grant ? Allowable Costs/Cost Principles Grant Number & Year: Various, including 202121S251443, FFY 2021; 202222S251443, FFY 2022; 1901NETANF, FFY 2019; 2101NERCMA, FFY 2021; 2201NERCMA, FFY 2022; 2201NECCDD, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303 (October 1, 2021) states, in relevant part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be necessary, reasonable, and adequately documented. 45 CFR ? 75.302 (October 1, 2021) requires financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 400.1 (January 1, 2022), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. 2 CFR ? 200.303 (January 1, 2022) states, in part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. 45 CFR ? 75.511(b) and 2 CFR ? 200.511(b) (January 1, 2022) state, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that amounts charged to Federal programs are proper. Condition: The Agency did not properly charge Federal programs for seven allocations tested. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-031, 2021-032 Questioned Costs: $44,356 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For seven of 14 allocations tested, we noted the following: ? We tested the allocation of cost center 25C21940 Field Office Resource Development for the quarter ended September 30, 2021, which is allocated based on Time & Effort reports. The payroll costs for 85 employees were charged to the cost center; however, four of the employees? payroll costs should not have been charged to the cost center. The four employees tested included a Federal Aid Administrator, a Program Accuracy Specialist, and two Office Specialists. The supervisors they worked with were not charged to this cost center, and the employees were not employed as Resource Developers, which was the job title of most of the employees included in this cost center. As a result of these employees being charged to the Resource Development cost center instead of their appropriate cost centers, Child Care and Development, Foster Care, Adoption Assistance, Guardianship Assistance, and Medicaid were not charged correctly, ranging from undercharges of $2,653 to overcharges of $2,402. Additionally, we were unable to determine how the payroll costs of $9,858 to the Federal Aid Administrator should have been allocated. The Resource Development cost center allocated $1,444,162 for the quarter ended September 30, 2021. A similar finding was noted in the prior audit. ? We tested the allocation of cost center 25C20680 Legal Services General Legal Teams for the quarter ended June 30, 2022, which is allocated based on Time & Effort reports. The payroll costs for a Legislative Coordinator were recorded to this cost center during the quarter. However, these costs should have been recorded to cost center 25C20720 Communications and Legislative Services Administration. As a result, this employee?s payroll costs of $15,777 during the quarter were not allocated to Federal programs correctly. We were unable to determine how these payroll costs should have been allocated. The Legal Services General Legal Teams cost center allocated $1,332,052 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21960 Field Office Social Services Casework for quarter ended September 30, 2021, which is allocated based on random moment time studies (RMTS) results. The Bridges to Independence program and Guardianship Assistance program should have been allocated $1,464 each from this cost center; however, the Agency did not include these programs in the allocation. As a result, the Federal grants for Refugee and Entrant Assistance, Child Care and Development, Foster Care, Adoption Assistance, Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Medicaid were overcharged, ranging from $3 to $982, and the Guardianship Assistance grant was undercharged $732. The Field Office Social Services Casework cost center allocated $8,099,617 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C21920 Field Office Child Protection & Safety Services for the quarter ended June 30, 2022, which is allocated based on RMTS results. The Agency began using a new RMTS system in January 2022; however, the Agency did not set up the quarterly summary reports correctly. Below are the issues noted: o RMTS observations for Trial Home Visits were not included in the allocation. As a result, State programs were undercharged, and Federal programs were overcharged. o The RMTS observations for Child Protection Initial Assessment were not properly allocated. As a result, Foster Care was overcharged, and Adoption and Guardianship were undercharged. o The RMTS observations for Before or After Work Hours were incorrectly included in the State?s allocation. As a result, Federal programs were undercharged. In total, Federal grants for Adoption Assistance, Foster Care, and Guardianship Assistance were undercharged $28,560, $113,762, and $1,990, respectively. The Field Office Child Protection & Safety Services cost center allocated $12,429,881 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21910 Field Office Administration for the quarter ended June 30, 2022, which is allocated based on labor hours. The Agency did not include all of the applicable labor hours for the Medicaid program. As a result, the Federal grants for Adoption Assistance, Foster Care, Guardianship Assistance, Refugee and Entrant Assistance, Child Care and Development, TANF, and SNAP were overcharged, ranging from $265 to $30,556, and the Medicaid grant was undercharged $235,906. The Field Office Administration cost center allocated $3,236,547 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C20990 IST Application NFOCUS Applications for the quarter ended September 30, 2021, which is allocated based on client counts per NFOCUS/MMIS reports. We noted that the Foster Care and TANF recipient counts used in the allocation did not agree to support. The Foster Care count included 71 clients that were paid with State funds, resulting in $265 being overcharged to the Foster Care grant, and the TANF count included 48 clients that were paid with State funds, resulting in $358 being overcharged to the TANF grant. Additionally, we were unable to trace the member counts to documentation that supported allocating $1,853,284 to Medicaid and $283,190 to the Children?s Health Insurance Program (CHIP). The Agency did not maintain the member count reports used at the time of the allocation. The Agency was able to generate a historical report; however, while the report amounts were similar, they did not agree with the counts used in the allocation. The Agency did maintain system summary reports at the time of the allocation, and the total counts on the summary reports did agree to amounts used for the allocation. However, as the summary reports used did not maintain the detail of members counted, we could not verify the accuracy of the reports used. The IST Application Services NFOCUS Applications cost center allocated $3,800,340 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C23823 iServe IAPD H971 ? Shared for the quarter ending June 30, 2022. The Agency is developing the new iServe Nebraska Portal, which is an application for Nebraskans to apply for benefits from Federal and State programs. This application will be replacing ACCESSNebraska, the current application used by Nebraskans to apply for benefits. For the implementation phase of the project, the Agency was only allocating costs to the following four programs: LIHEAP, TANF, SNAP, and Medicaid. However, there are other Federal and State programs that will utilize the iServe application. We asked for documentation to support that these were the only four programs that were benefiting from this stage of the project. The Agency provided correspondence from its Federal contacts, which stated: ?As long as SNAP, Medicaid, LIHEAP, and TANF are the only benefiting programs for the State?s iServe Nebraska Portal project, the State may just include these four programs in the development of its cost allocation plan. If/when the State decides to add other Federal programs that will benefit from enhancements to the portal, it will need to revisit and adjust its cost allocation plan.? We asked again for documentation, such as internal planning documents, to support that these were the only four programs benefiting from this stage of the project. The Agency replied that it did not have the documentation at this time. The iServe IAPD H971 ? Shared cost center allocated $6,019,121 for the quarter ended June 30, 2022. We were unable to determine questioned costs as we were not able to determine which Federal and State program should receive an allocation, and the basis for how the costs would be allocated to these programs. Cause: Inadequate procedures to ensure that system reports were set up correctly, employees coded their time correctly, and allocations were adequately supported and calculated correctly. Effect: Without adequate documentation to support the allocation of costs, there is increased risk of programs not being charged the proper amounts. Recommendation: We recommend the Agency improve procedures to ensure that employee pay is recorded correctly in E1, system reports are set up correctly, and costs are properly allocated and charged. Management Response: The Agency agrees.
Program: Various, including AL 84.010 ? Title I Grants to Local Educational Agencies; AL 93.568 ? Low-Income Home Energy Assistance (LIHEAP); and AL 93.659 ? Adoption Assistance ? Cash Management Grant Number & Year: Various Federal Grantor Agency: Various Criteria: 31 CFR ? 205.12 (July 1, 2021) states, in part, the following: (a) We and a State may negotiate the use of mutually agreed upon funding techniques. We may deny interest liability if a State does not use a mutually agreed upon funding technique. Funding techniques should be efficient and minimize the exchange of interest between States and Federal agencies. (b) We and a State may base our agreement on the sample funding techniques listed in paragraphs (b)(1) through (b)(5) of this section . . . . * * * * (3) Average clearance means that a Federal Program Agency, on the dollar-weighted average day of clearance of a disbursement, transfers to a State a lump sum equal to the actual amount of funds that the State is paying out. The dollar-weighted average day of clearance is the day when, on a cumulative basis, 50 percent of the funds have been paid out. The dollar-weighted average day of clearance is calculated from a clearance pattern, consistent with ?205.20. Per 31 CFR ? 205.19(e) (July 1, 2021) states, in part, the following: A State may use actual data, a clearance pattern, or statistical sampling to calculate interest. A clearance pattern used to calculate interest must meet the standards of ? 205.20. Per 31 CFR ? 205.20 (July 1, 2021): States use clearance patterns to project when funds are paid out, given a known dollar amount and a known date of disbursement. A State must ensure that clearance patterns meet the following standards: * * * * (b) A clearance pattern must accurately represent the flow of Federal funds under the Federal assistance programs to which it is applied. Per 31 CFR ? 205.22(b) (July 1, 2021): An authorized State official must certify that a clearance pattern corresponds to the clearance activity of the Federal assistance program which it is applied. An authorized State official must re-certify the accuracy of a clearance pattern at least every five years. . . . A State can begin to use a new clearance pattern on the date the new clearance pattern is certified. Condition: The Agency lacked adequate procedures to ensure that Federal funds were drawn in compliance with the Treasury Service Agreement (TSA). Repeat Finding: No Questioned Costs: N/A Statistical Sample: No Context: Twelve programs for the State use ?Average Clearance? to request Federal funds. For Average Clearance, the funds are requested so that they are deposited on the dollar-weighted average day of clearance for the disbursement. Clearance patterns are recalculated every five years. The Agency uses historical data to determine the number of days each check was outstanding (clearance time). The clearance time is multiplied by the percentage of total disbursements for those checks, and a dollar-weighted average day of clearance is determined by summing the clearance factor for each day. A clearance pattern of 3.43 days would have 57% of funds deposited on day three and 43% deposited on day four. On December 14, 2021, the Agency and the U.S. Department of the Treasury signed the TSA, establishing the Letter of Credit clearance patterns to be used for the period of July 1, 2021, through June 30, 2022. As of the date of the APA?s review in November 2022, however, the Agency had not yet updated the Delay of Draw (DOD) system to reflect these clearance patterns. Consequently, the Agency continued to draw Federal funds using the fiscal year 2021 clearance patterns, some of which were last calculated in fiscal year 2016. The APA identified three Federal programs that were drawing Federal funds at a faster rate than allowed by the TSA. ? AL 84.010 draws funds through multiple DOD #?s, including DOD #0999. DOD #0999 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.43 days for fiscal year 2022. This resulted in the early draw of 43% of AL 84.010 funds drawn through DOD #0999. ? AL 93.568 draws funds through multiple DOD #?s, including DOD #2761. DOD #2761 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.37 days for fiscal year 2022. This resulted in the early draw of 37% of AL 93.568 funds drawn through DOD #2761. ? AL 93.659 draws funds through multiple DOD #?s, none of which were properly updated from a 3-day clearance pattern to the certified clearance pattern of 4.24 days. This resulted in the early draw of AL 93.659 funds by 1.24 days. During testing of 25 Federal deposits, we noted the following: ? For one deposit tested, the Agency drew down $117,779 more in Federal funds than there were recorded as expenditures in E1, the State?s accounting system. The Agency held these funds throughout the fiscal year, continuing to do so until the APA raised concerns about them. See Schedule of Findings and Questioned Costs for chart/table. ? Due to the previously noted error in updating the DOD system, for 2 of 25 Federal draws tested, the APA noted that the Agency drew Federal funds earlier than were allowed under the TSA. As the State would have been entitled to the overdrawn funds the following day, there are no questioned costs. See Schedule of Findings and Questioned Costs for chart/table. Cause: Inadequate review of drawdowns. Agency staff stated that they had not had time to update the clearance patterns in the DOD system. Effect: Without adequate procedures to ensure that Federal drawdowns comply with the TSA, there is an increased risk of noncompliance with Federal requirements, which could lead to interest penalties and sanctions. Recommendation: We recommend the Agency strengthen its procedures for ensuring that clearance patterns are updated in a timely manner to comply with the TSA, and draws are supported by expenditures in the accounting system. Management Response: Management agrees with the finding and has updated clearance patterns to align with the most recent TSA agreement.
Program: AL 93.568 ? COVID19 ? Low-Income Home Energy Assistance (LIHEAP); AL 93.568 ? Low-Income Home Energy Assistance ? Eligibility Grant Number & Year: 2101NEE5C6, end 9/30/2022; 2201NELIEA, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 96.30(a) (October 1, 2021) states: Except where otherwise required by Federal law or regulation, a State shall obligate and expend block grant funds in accordance with the laws and procedures applicable to the obligation and expenditure of its own funds. Fiscal control and accounting procedures must be sufficient to (a) permit preparation of reports required by the statute authorizing the block grant and (b) permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of the statute authorizing the block grant. 476 NAC 2-002, ?Eligibility,? states: To qualify for the Low Income Home Energy Assistance Program, a household must: (A) Be considered an economically-vulnerable household; (B) Meet income guidelines according to household size; (C) Meet citizenship and residency requirements; and (D) Not otherwise be disqualified or ineligible. 476 NAC 1-004.6 defines ?ECONOMICALLY-VULNERABLE HOUSEHOLD? as follows: A household that is unprotected from increases in energy costs, and, therefore, must use its own resources to meet energy cost increases. 476 NAC 3-002.01, ?Provider,? states: The Department makes payment on behalf of an eligible household directly to a provider. To ensure payment, a household must provide the Department with the applicable provider name and account number. Neb. Rev. Stat. ? 68-1215 (Supp. 2021) states: For purposes of determining eligibility of a household for the low-income home energy assistance program pursuant to section 68-1201 as administered by the State of Nebraska pursuant to the federal Energy Policy Act of 2005, 42 U.S.C. 8621 to 8630, the Department of Health and Human Services shall apply a household total annual income level of one hundred fifty percent of the federal poverty level published annually by the United States Department of Health and Human Services or such successor agency which publishes the federal poverty level. Per the 2021 Poverty Guidelines (Published by the U.S. Assistant Secretary for Planning and Evaluation), the federal poverty level for a household of three individuals was $21,960. 476 NAC 2-002.01, ?Income Guidelines,? states: For purposes of calculating and treating income for Low Income Home Energy Assistance Program eligibility, the Department applies the rules and regulations from the Supplemental Nutrition Assistance Program, Title 475 Nebraska Administrative Code (NAC). 475 NAC 3-002.02(A), ?Earned Income,? states: Earned income includes all the following: (i) All gross wages and salaries of an employee including wages earned by a household member that are garnished or transferred by an employer and paid to a third party for household expenses, such as rent; 475 NAC 3-002.03(D), ?Verification of Income,? states: Before initial certification, the Department will verify gross non-excluded income. At the time of recertification, earned income will be verified again. Additionally, unearned income will be verified if the amount or the source has changed. Good internal control requires procedures to ensure that adequate documentation is maintained to support that households meet eligibility requirements and payments are issued to the proper providers. Condition: The Agency lacked adequate procedures to ensure that LIHEAP applicants met eligibility requirements prior to issuing aid payments. A similar finding was noted in the prior audit. Repeat Finding: 2021-041 Questioned Costs: $2,610 known (2101NEE5C6, $2,390; 2201NELIEA, $220) Statistical Sample: No Context: We tested 40 payments and noted the following: ? For one payment tested, the Agency did not consider all sources of income when determining household eligibility. The Agency calculated the household?s annual income to be $26,178/year; however, this did not include the income of one household member. The Agency did not verify the member?s income at the time of application; however, we observed that the individual had earnings of $16,145 during the program year. This would increase household income to $42,323/year, which is more than 150% of the Federal poverty level. We question the $300 supplemental payment tested in the sample, as well as the 2nd supplemental of $545 issued in June 2022 and the original $220 heating payment issued in November 2021. ? For another payment tested, the Agency did not verify that the household was economically vulnerable or verify the applicant?s provider account information when determining eligibility. The only provider-verified information on file was a utility bill addressed to the applicant?s personal business, which did not agree to the applicant?s home address as reported on their LIHEAP application. As such, it could not be determined that the household was economically vulnerable to energy costs or that the payment was issued to the correct provider. We question the $300 supplemental payment tested in the sample, as well as the 2nd supplemental payment of $545 issued in June 2022 and the original $700 heating payment issued in October 2021. Payment errors noted for the sample tested were $600. The total sample tested was $17,686, and total LIHEAP assistance payments for the fiscal year were $63,388,746. The dollar error rate for the sample was 3.39% ($600/$17,686), which estimates the potential dollar risk for fiscal year 2022 to be $2,148,878 (dollar rate multiplied by the population). We also noted $2,010 of questioned costs on other payments for the applicants tested. Cause: Inadequate review procedures. Effect: When Agency staff fail to properly verify household information, there is increased risk of fraud, loss of Federal funds, and noncompliance with Federal and State regulations. Recommendation: We recommend the Agency strengthen its procedures to ensure compliance with State and Federal requirements. Management Response: The Agency agrees.
Program: AL 93.568 ? Low-Income Home Energy Assistance (LIHEAP) ? Reporting Grant Number & Year: Various, including 2101NELIEA, FFY 2021 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 96.30(a) (October 1, 2021) requires ?fiscal control and accounting procedures must be sufficient to (a) permit preparation of reports required by the statute authorizing the block grant . . . .? 2 CFR 170 (January 1, 2022), Appendix A, Section I, ?Reporting Subawards and Executive Compensation,? states, in relevant part: (a) Reporting of first-tier subawards. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency . . . . . . . . (2)(ii) For subaward information, report no later than the end of the month following the month in which the obligation was made. 45 CFR 96.82(a) (October 1, 2021) states: Each grantee which is a State or an insular area which receives an annual allotment of at least $200,000 shall submit to the Department, as part of its LIHEAP grant application, the data required by section 2605(c)(1)(G) of Public Law 97?35 (42 U.S.C. 8624(c)(1)(G)) for the 12-month period corresponding to the Federal fiscal year (October 1?September 30) preceding the fiscal year for which funds are requested. The data shall be reported separately for LIHEAP heating, cooling, crisis, and weatherization assistance. 42 U.S.C 8624(c)(1)(G) requires a plan that does the following: [S]tates, with respect to the 12-month period specified by the Secretary, the number and income levels of households which apply and the number which are assisted with funds provided under this subchapter, and the number of households so assisted with ? (i) one or more members who had attained 60 years of age; (ii) one or more members who were disabled; and (iii) one or more young children; . . . . The ?Instructions for the LIHEAP Household Report for FFY 2021?Long Form? (Published October 21, 2021, by the U.S. Division of Energy Assistance) states, in part: Gross Household Income Adjusted by Household Size A household?s gross annual income and/or household size can change during the fiscal year. If a household received two benefits or services under the same type of LIHEAP assistance, use that household's gross annual income and household size at the time of the initial determination of benefits or services in calculating that household's poverty level for statistical reporting. Uniform Counting and Reporting Annual gross household incomes, adjusted by the number of household members (household size), are to be used in computing household poverty percentages, using the 2020 HHS Poverty Guidelines that were in effect at the beginning of FFY 2021 (October 1, 2020). Condition: The Agency lacked adequate procedures to ensure that required Federal Funding Accountability and Transparency Act (FFATA) reports were submitted, and Household Report information reported was complete and accurate. Repeat Finding: 2021-042 Questioned Costs: N/A Statistical Sample: No Context: During review of Federally required LIHEAP reports, we noted the following: FFATA Reporting Neither the Agency nor the Nebraska Department of Environment and Energy (NDEE), which distributes weatherization subawards, filed the required FFATA reports in a timely manner. NDEE issued multiple subawards to Nebraska community action partnerships, as well as the Habitat for Humanity ? Omaha, that exceeded the $30,000 reporting requirement, but none were reported until August 2022. The APA tested six awards and award amendments issued during the fiscal year and noted that all six awards were submitted from 61 to 303 days after they were required to be submitted. During fiscal year 2022 NDEE issued subawards totaling $6,143,036. See Schedule of Findings and Questioned costs for chart/table. The eight subrecipients during the fiscal year were paid a total of $2,866,620. Households Report In its LIHEAP Household Report for FFY2021, the Agency reported 671 applicant households for the weatherization program. This information for weatherization applicant households was provided by NDEE, which obtained the figures from its subrecipients. No documentation was provided to support the number or type of weatherization applicant households. The 671 applicants were also reported by poverty level, as shown in the table below. See Schedule of Findings and Questioned costs for chart/table. Due to the lack of data provided for the weatherization applicant households, we were unable to verify the accuracy of the applicants reported. We selected a sample of 15 households included on the FFY2021 Household Report as LIHEAP-assisted households, LIHEAP applicant households, or weatherization-assisted households. Three of 15 households tested were not properly reported or classified, as follows: ? One LIHEAP applicant household was reported at the ?Under 75% Poverty? income level. However, the household should have been reported at the ?Over 150% Poverty? income level. ? One LIHEAP applicant household was reported at the ?Under 75% Poverty? income level. However, the household should have been reported at the ?75% - 100% Poverty? income level. ? One LIHEAP applicant household was reported at the ?75% - 100% Poverty? income level. However, the household should have been reported at the ?Under 75% Poverty? income level. Cause: Inadequate review and reporting procedures. Effect: Without adequate procedures to ensure that reports contain accurate information and are submitted timely, there is an increased risk of noncompliance with Federal regulations. Recommendation: We recommend the Agency strengthen its procedures to ensure that all participants of the LIHEAP program are reflected properly in the Household Report. We also recommend the Agency review its procedures for FFATA reporting to ensure compliance with Federal requirements. Management Response: The Agency agrees.
Program: AL 93.568 ? COVID19 ? Low-Income Home Energy Assistance (LIHEAP); AL 93.568 ? Low-Income Home Energy Assistance ? Eligibility Grant Number & Year: 2101NEE5C6, end 9/30/2022; 2201NELIEA, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 96.30(a) (October 1, 2021) states: Except where otherwise required by Federal law or regulation, a State shall obligate and expend block grant funds in accordance with the laws and procedures applicable to the obligation and expenditure of its own funds. Fiscal control and accounting procedures must be sufficient to (a) permit preparation of reports required by the statute authorizing the block grant and (b) permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of the statute authorizing the block grant. 476 NAC 2-002, ?Eligibility,? states: To qualify for the Low Income Home Energy Assistance Program, a household must: (A) Be considered an economically-vulnerable household; (B) Meet income guidelines according to household size; (C) Meet citizenship and residency requirements; and (D) Not otherwise be disqualified or ineligible. 476 NAC 1-004.6 defines ?ECONOMICALLY-VULNERABLE HOUSEHOLD? as follows: A household that is unprotected from increases in energy costs, and, therefore, must use its own resources to meet energy cost increases. 476 NAC 3-002.01, ?Provider,? states: The Department makes payment on behalf of an eligible household directly to a provider. To ensure payment, a household must provide the Department with the applicable provider name and account number. Neb. Rev. Stat. ? 68-1215 (Supp. 2021) states: For purposes of determining eligibility of a household for the low-income home energy assistance program pursuant to section 68-1201 as administered by the State of Nebraska pursuant to the federal Energy Policy Act of 2005, 42 U.S.C. 8621 to 8630, the Department of Health and Human Services shall apply a household total annual income level of one hundred fifty percent of the federal poverty level published annually by the United States Department of Health and Human Services or such successor agency which publishes the federal poverty level. Per the 2021 Poverty Guidelines (Published by the U.S. Assistant Secretary for Planning and Evaluation), the federal poverty level for a household of three individuals was $21,960. 476 NAC 2-002.01, ?Income Guidelines,? states: For purposes of calculating and treating income for Low Income Home Energy Assistance Program eligibility, the Department applies the rules and regulations from the Supplemental Nutrition Assistance Program, Title 475 Nebraska Administrative Code (NAC). 475 NAC 3-002.02(A), ?Earned Income,? states: Earned income includes all the following: (i) All gross wages and salaries of an employee including wages earned by a household member that are garnished or transferred by an employer and paid to a third party for household expenses, such as rent; 475 NAC 3-002.03(D), ?Verification of Income,? states: Before initial certification, the Department will verify gross non-excluded income. At the time of recertification, earned income will be verified again. Additionally, unearned income will be verified if the amount or the source has changed. Good internal control requires procedures to ensure that adequate documentation is maintained to support that households meet eligibility requirements and payments are issued to the proper providers. Condition: The Agency lacked adequate procedures to ensure that LIHEAP applicants met eligibility requirements prior to issuing aid payments. A similar finding was noted in the prior audit. Repeat Finding: 2021-041 Questioned Costs: $2,610 known (2101NEE5C6, $2,390; 2201NELIEA, $220) Statistical Sample: No Context: We tested 40 payments and noted the following: ? For one payment tested, the Agency did not consider all sources of income when determining household eligibility. The Agency calculated the household?s annual income to be $26,178/year; however, this did not include the income of one household member. The Agency did not verify the member?s income at the time of application; however, we observed that the individual had earnings of $16,145 during the program year. This would increase household income to $42,323/year, which is more than 150% of the Federal poverty level. We question the $300 supplemental payment tested in the sample, as well as the 2nd supplemental of $545 issued in June 2022 and the original $220 heating payment issued in November 2021. ? For another payment tested, the Agency did not verify that the household was economically vulnerable or verify the applicant?s provider account information when determining eligibility. The only provider-verified information on file was a utility bill addressed to the applicant?s personal business, which did not agree to the applicant?s home address as reported on their LIHEAP application. As such, it could not be determined that the household was economically vulnerable to energy costs or that the payment was issued to the correct provider. We question the $300 supplemental payment tested in the sample, as well as the 2nd supplemental payment of $545 issued in June 2022 and the original $700 heating payment issued in October 2021. Payment errors noted for the sample tested were $600. The total sample tested was $17,686, and total LIHEAP assistance payments for the fiscal year were $63,388,746. The dollar error rate for the sample was 3.39% ($600/$17,686), which estimates the potential dollar risk for fiscal year 2022 to be $2,148,878 (dollar rate multiplied by the population). We also noted $2,010 of questioned costs on other payments for the applicants tested. Cause: Inadequate review procedures. Effect: When Agency staff fail to properly verify household information, there is increased risk of fraud, loss of Federal funds, and noncompliance with Federal and State regulations. Recommendation: We recommend the Agency strengthen its procedures to ensure compliance with State and Federal requirements. Management Response: The Agency agrees.
Program: AL 93.575 ? Child Care and Development Block Grant - Allowable Costs/Cost Principles Grant Number & Year: 2201NECCDD, FFY 2022 Federal Grantor Agency: U.S. Department of Health & Human Services Criteria: 45 CFR ? 75.403 (October 1, 2021) provides the following, in relevant part: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. * * * * (g) Be adequately documented. See also ?? 75.300 through 75.309. Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.302 (October 1, 2021) requires financial management systems of the State sufficient to permit preparation of required reports and permit the tracing of funds to expenditures adequate to establish the use of these funds were in accordance with applicable regulations. EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. 45 CFR ? 75.511(b) (October 1, 2021) states, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that amounts charged to Federal funds are proper. A good internal control plan also requires that Federal reports be reconciled to accounting records, and adjustments and reconciling items be resolved in a timely manner. Condition: The Agency did not have adequate procedures to ensure administrative costs charged through the Cost Allocation Plan (CAP) were properly reconciled, and adjustments to the CAP were proper. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as complete. Repeat Finding: 2021-030 Questioned Costs: $38,730 known Statistical Sample: No Context: At the end of each quarter, the Agency performs a fund mix adjustment (FMA) between State and Federal funds based upon expenditures recorded on the accounting system and how costs should be recorded according to the Agency?s cost allocation plan. We tested three journal entries to reconcile expenditures to the CAP. For one Child Care and Development Block Grant FMA tested, multiple cost centers were erroneously excluded from the calculation, resulting in the Agency improperly charging $38,730 in expenditures to Federal funds when State funds should have been used. Cause: Inadequate procedures to ensure that all cost centers are reconciled, and adjustments to the CAP are proper. Effect: Unallowable expenditures were charged to Federal funds. When costs are not reconciled accurately, there is an increased risk for errors, fraud, and non-compliance with Federal regulations. Recommendation: We recommend the Agency strengthen procedures to ensure reconciling entries are complete and accurate. We further recommend the Agency strengthen review procedures to ensure compliance with Federal regulations. Management Response: The Agency agrees.
Program: Various, including AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.558 ? Temporary Assistance for Needy Families; AL 93.566 ? Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 ? Child Care and Development Block Grant ? Allowable Costs/Cost Principles Grant Number & Year: Various, including 202121S251443, FFY 2021; 202222S251443, FFY 2022; 1901NETANF, FFY 2019; 2101NERCMA, FFY 2021; 2201NERCMA, FFY 2022; 2201NECCDD, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303 (October 1, 2021) states, in relevant part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be necessary, reasonable, and adequately documented. 45 CFR ? 75.302 (October 1, 2021) requires financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 400.1 (January 1, 2022), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. 2 CFR ? 200.303 (January 1, 2022) states, in part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. 45 CFR ? 75.511(b) and 2 CFR ? 200.511(b) (January 1, 2022) state, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that amounts charged to Federal programs are proper. Condition: The Agency did not properly charge Federal programs for seven allocations tested. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-031, 2021-032 Questioned Costs: $44,356 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For seven of 14 allocations tested, we noted the following: ? We tested the allocation of cost center 25C21940 Field Office Resource Development for the quarter ended September 30, 2021, which is allocated based on Time & Effort reports. The payroll costs for 85 employees were charged to the cost center; however, four of the employees? payroll costs should not have been charged to the cost center. The four employees tested included a Federal Aid Administrator, a Program Accuracy Specialist, and two Office Specialists. The supervisors they worked with were not charged to this cost center, and the employees were not employed as Resource Developers, which was the job title of most of the employees included in this cost center. As a result of these employees being charged to the Resource Development cost center instead of their appropriate cost centers, Child Care and Development, Foster Care, Adoption Assistance, Guardianship Assistance, and Medicaid were not charged correctly, ranging from undercharges of $2,653 to overcharges of $2,402. Additionally, we were unable to determine how the payroll costs of $9,858 to the Federal Aid Administrator should have been allocated. The Resource Development cost center allocated $1,444,162 for the quarter ended September 30, 2021. A similar finding was noted in the prior audit. ? We tested the allocation of cost center 25C20680 Legal Services General Legal Teams for the quarter ended June 30, 2022, which is allocated based on Time & Effort reports. The payroll costs for a Legislative Coordinator were recorded to this cost center during the quarter. However, these costs should have been recorded to cost center 25C20720 Communications and Legislative Services Administration. As a result, this employee?s payroll costs of $15,777 during the quarter were not allocated to Federal programs correctly. We were unable to determine how these payroll costs should have been allocated. The Legal Services General Legal Teams cost center allocated $1,332,052 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21960 Field Office Social Services Casework for quarter ended September 30, 2021, which is allocated based on random moment time studies (RMTS) results. The Bridges to Independence program and Guardianship Assistance program should have been allocated $1,464 each from this cost center; however, the Agency did not include these programs in the allocation. As a result, the Federal grants for Refugee and Entrant Assistance, Child Care and Development, Foster Care, Adoption Assistance, Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Medicaid were overcharged, ranging from $3 to $982, and the Guardianship Assistance grant was undercharged $732. The Field Office Social Services Casework cost center allocated $8,099,617 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C21920 Field Office Child Protection & Safety Services for the quarter ended June 30, 2022, which is allocated based on RMTS results. The Agency began using a new RMTS system in January 2022; however, the Agency did not set up the quarterly summary reports correctly. Below are the issues noted: o RMTS observations for Trial Home Visits were not included in the allocation. As a result, State programs were undercharged, and Federal programs were overcharged. o The RMTS observations for Child Protection Initial Assessment were not properly allocated. As a result, Foster Care was overcharged, and Adoption and Guardianship were undercharged. o The RMTS observations for Before or After Work Hours were incorrectly included in the State?s allocation. As a result, Federal programs were undercharged. In total, Federal grants for Adoption Assistance, Foster Care, and Guardianship Assistance were undercharged $28,560, $113,762, and $1,990, respectively. The Field Office Child Protection & Safety Services cost center allocated $12,429,881 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21910 Field Office Administration for the quarter ended June 30, 2022, which is allocated based on labor hours. The Agency did not include all of the applicable labor hours for the Medicaid program. As a result, the Federal grants for Adoption Assistance, Foster Care, Guardianship Assistance, Refugee and Entrant Assistance, Child Care and Development, TANF, and SNAP were overcharged, ranging from $265 to $30,556, and the Medicaid grant was undercharged $235,906. The Field Office Administration cost center allocated $3,236,547 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C20990 IST Application NFOCUS Applications for the quarter ended September 30, 2021, which is allocated based on client counts per NFOCUS/MMIS reports. We noted that the Foster Care and TANF recipient counts used in the allocation did not agree to support. The Foster Care count included 71 clients that were paid with State funds, resulting in $265 being overcharged to the Foster Care grant, and the TANF count included 48 clients that were paid with State funds, resulting in $358 being overcharged to the TANF grant. Additionally, we were unable to trace the member counts to documentation that supported allocating $1,853,284 to Medicaid and $283,190 to the Children?s Health Insurance Program (CHIP). The Agency did not maintain the member count reports used at the time of the allocation. The Agency was able to generate a historical report; however, while the report amounts were similar, they did not agree with the counts used in the allocation. The Agency did maintain system summary reports at the time of the allocation, and the total counts on the summary reports did agree to amounts used for the allocation. However, as the summary reports used did not maintain the detail of members counted, we could not verify the accuracy of the reports used. The IST Application Services NFOCUS Applications cost center allocated $3,800,340 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C23823 iServe IAPD H971 ? Shared for the quarter ending June 30, 2022. The Agency is developing the new iServe Nebraska Portal, which is an application for Nebraskans to apply for benefits from Federal and State programs. This application will be replacing ACCESSNebraska, the current application used by Nebraskans to apply for benefits. For the implementation phase of the project, the Agency was only allocating costs to the following four programs: LIHEAP, TANF, SNAP, and Medicaid. However, there are other Federal and State programs that will utilize the iServe application. We asked for documentation to support that these were the only four programs that were benefiting from this stage of the project. The Agency provided correspondence from its Federal contacts, which stated: ?As long as SNAP, Medicaid, LIHEAP, and TANF are the only benefiting programs for the State?s iServe Nebraska Portal project, the State may just include these four programs in the development of its cost allocation plan. If/when the State decides to add other Federal programs that will benefit from enhancements to the portal, it will need to revisit and adjust its cost allocation plan.? We asked again for documentation, such as internal planning documents, to support that these were the only four programs benefiting from this stage of the project. The Agency replied that it did not have the documentation at this time. The iServe IAPD H971 ? Shared cost center allocated $6,019,121 for the quarter ended June 30, 2022. We were unable to determine questioned costs as we were not able to determine which Federal and State program should receive an allocation, and the basis for how the costs would be allocated to these programs. Cause: Inadequate procedures to ensure that system reports were set up correctly, employees coded their time correctly, and allocations were adequately supported and calculated correctly. Effect: Without adequate documentation to support the allocation of costs, there is increased risk of programs not being charged the proper amounts. Recommendation: We recommend the Agency improve procedures to ensure that employee pay is recorded correctly in E1, system reports are set up correctly, and costs are properly allocated and charged. Management Response: The Agency agrees.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Allowability & Eligibility Grant Number & Year: G2101NECCDF, FFY 2021; G2101NECCDM, FFY 2021; G2201NECCDF, FFY 2022; G2201NECCDM, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 42 USC ? 9858k(b) (1992) states, ?With regard to services provided to students enrolled in grades 1 through 12, no financial assistance provided under this subchapter shall be expended for ? (1) any services provided to such students during the regular school day[.]? To be eligible for services, 45 CFR ? 98.20 (October 1, 2021) requires a child to be under 13 years of age, a citizen, and reside with a family whose income does not exceed 85% of the State?s median income. 45 CFR ? 98.55 (October 1, 2021) states: (a) Federal matching funds are available for expenditures in a State based upon the formula specified at ? 98.63(a). (b) Expenditures in a State under paragraph (a) of this section will be matched at the Federal medical assistance rate for the applicable fiscal year for allowable activities, as described in the approved State Plan, that meet the goals and purposes of the Act. 45 CFR ? 98.67(a) (October 1, 2021) states ?Lead Agencies shall expend and account for CCDF [Child Care and Development Fund] funds in accordance with their own laws and procedures for expending and accounting for their own funds.? Title 392 NAC 3-004.01(A) (Eff. 9/15/2020) states, ?The Department pays by attendance, not enrollment. Providers do not receive payment when the provider is on vacation, is ill, or is not providing care for some reason unrelated to the child or recipient.? Title 392 NAC 3-004.01(A)(i) (Eff. 9/15/2020) states, ?The provider may bill the full authorized amount for times that the child is absent on a scheduled day, up to five times per month.? Title 392 NAC 3-001.02(D) (Eff. 9/15/2020) states, ?The recipient and child care provider must ensure that the services are delivered as authorized.? Title 392 NAC 4-002. (Eff. 9/15/2020) states, in relevant part, ?Before furnishing any service, each provider must sign an enrollment form agreeing: (A) No payments will be made for child care provided to a child before the service authorization date;? and ?(G) To retain authorizations, billing documents, and attendance records for four years to support and document all claims[.]? Title 392 NAC 2-011.02 (Eff. 9/15/2020) states, in part, ?The parent of a child who is a ward of the Department or the parent of a tribal ward who attests the parent is unable to receive child care services from the tribe, is eligible for services without regard to income . . . .? Title 392 NAC 1-001 (Eff. 9/15/2020) provides the following definitions for age levels of care: 001.13 INFANT. A child age six weeks to 18 months. 001.21 PRESCHOOLER. A child age 36 months to school-age. 001.26 SCHOOL-AGED CHILD. A child who attends kindergarten or above. 001.31 TODDLER. A child age 18 months to 36 months. Neb. Rev. Stat. ? 68-1206 (Supp. 2021) provides, in part, the following: (2)(a) [T]he department shall participate in the federal child care assistance program under 42 U.S.C. 9857 et seq., . . . and provide child care assistance to families with incomes up to (i) one hundred eighty-five percent of the federal poverty level prior to October 1, 2023 . . . . (b) [I]n determining ongoing eligibility, if a family?s income exceeds one hundred eighty-five percent of the federal poverty level prior to October 1, 2023, . . . the family shall receive transitional child care assistance through the remainder of the family?s eligibility period or until the family?s income exceeds eighty-five percent of the state median income for a family of the same size as reported by the United States Bureau of the Census, whichever occurs first. . . . The amount of such child care assistance shall be based on a cost-shared plan between the recipient family and the state and shall be based on a sliding-scale methodology. A recipient family may be required to contribute a percentage of such family?s gross income for child care . . . . The Child Care Provider Handbook (Handbook), issued by the Agency in January of 2008, states, in relevant part, ?You must complete the Attendance Calendar to accurately reflect the dates on which child care services were provided as well as the exact number of hours of service provided. For each day, partial hours of service provided should be rounded up to the next quarter hour[.]? (pg. 10) The Handbooks defines ?Full Day of Care? as follows: ?Five hours and 46 minutes (6 hours) through 9 hours (9 hours and 59 minutes) unless the child care program defines its day as more than 9 hours.? (pg. 1) The Handbook also states, ?Hourly or daily units listed on the Authorization are for the total time frame of the Authorization period - less than 6 hours are hourly units - 6 hours or more are daily units[.]? (pg. 8) Good internal control requires procedures to ensure that payments are in accordance with Federal and State requirements. Condition: Child care payments did not comply with Federal and State requirements. A similar finding has been noted in our previous audit reports since 2007. Repeat Finding: 2021-043 Questioned Costs: $9,556 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: We tested 25 child care claims paid with Federal funds and 5 child care claims paid with matching general funds. We noted 11 claims with errors. Some payments had more than one type of error. ? For seven claims tested, there were discrepancies between the attendance sheet and the claim billed: o For one claim, the provider billed a day of child care when the provider was closed in observation of the July 4th holiday. o For one claim, the provider billed an absent day on a Saturday when the child did not normally attend on weekends. o For three claims, the provider billed for more hours and/or days than what was recorded on the child?s attendance sheet: ? One provider billed 36 hours and one day, while the attendance sheet showed the child attended 32 hours and one day. ? One provider billed for 12 days of care, while the attendance sheet showed only 11 days of care. ? One provider billed for 16 days when the attendance sheet showed only 15 days of care. o For two claims tested, the providers billed a full day of care when only 5.75 hours should have been billed. One provider did this for four different days on the claim. ? For two claims tested, the rate charged for child care was higher than what is allowed per the child?s age: o For one claim, the child started kindergarten in August 2021 and should have been billed at the school age rate; however, the provider was billing at the preschool rate. Child care was billed at the preschool rate through the end of the fiscal year, and the child was still authorized at a preschool rate at the time of testing in September 2022. o For one claim, the child should have been billed at a preschool rate but was billed at a toddler rate through our audit period. ? For one claim, the provider charged for a full day of care on a school day that the child would have been in school. ? For one claim, the provider billed more child care than what was authorized. A maximum of 25 hours of care were authorized per week; however, the provider billed care 5 days a week (i.e., 30+ hours/week) for the child. ? On one claim, there was a Child Support Court Order requiring child care expenses to be split 48/52 between the mother and the father of the child, respectively. Therefore, the mother should be responsible for only 48% of the child care costs, and the State should be providing subsidy assistance for only her portion of the costs (as she was the only parent applying for benefits). Instead, 100% of the remaining child care costs were being subsidized, after the family fee was applied. ? For one claim tested, the family?s income was calculated incorrectly, and the family should not have qualified for child care until March 2022, when the mother quit her job. The Agency should have calculated the mother?s monthly income as $2,728. Instead, the Agency used $0 for the mother?s income, even though she was employed by the Agency. Had the correct income been used, the family would not have been eligible for the child care subsidy program. ? One child was in Tribal Court custody and had been placed with a foster parent. There was no attest from the foster parent indicating that she could not receive child care services from the tribe. Federal payment errors noted for the sample tested were $471. The total Federal sample tested was $8,086, and total child care Federal assistance claims for the fiscal year were $37,138,666. The dollar rate for the sample was 5.82% ($471/8,086), which estimates the potential dollar risk for the fiscal year 2022 to be $2,161,470 (dollar rate multiplied by the population). In addition to the $471 Federal questioned costs noted on the sample items tested, we also noted $2,093 of Federal questioned costs on other line items of the claims reviewed and $3,317 questioned costs used to meet match, which resulted from miscalculated budgets, service authorizations exceeded, and incorrect rate charges. Unusual Claims Tested We reviewed the detail of child care claims for unusual items, such as over 300 hours billed in a month, more than 31 days billed in a month, and duplicate claims. We noted the following issues with the claims tested for the following three providers: Provider 1 This provider billed for 300 hourly units for several children during October and November 2021. The provider incorrectly billed hourly units instead of daily units, inflating the payment amount received. The Agency reviewed the provider?s attendance calendars for August 2021, September 2021, and October 2021 and established overpayments on January 22, 2022, totaling $10,595 for this incorrect billing. However, the Agency failed to identify a second provider that also billed for one of the families in October and November 2021. We reviewed the attendance calendars for both providers and identified the following issues: ? There were 336.75 hours in October and 175.5 hours in November 2021 that overlapped between the two providers. The following chart includes an example of overlapping hours billed on October 1, 2021. See Schedule of Findings and Questioned Costs for chart/table. ? Hours of care provided exceeded the service authorizations. The service authorizations covering October 2021 for both providers stated that child care was authorized up to 40 hours per week. A new service authorization issued for November 2021 authorized child care up to 45 hours per week, and hours were to be split between the primary and secondary provider. Provider 1 billed full-time for all four children during October and November 2021, with weekly hours billed ranging from 60 hours up to 126 hours. The following chart shows the total number of weekly hours each child was in care for both providers in October 2021. See Schedule of Findings and Questioned Costs for chart/table. ? The hours of care billed were not reasonable. In October 2021, the client was authorized for job search; however, hours of care began at 6:00 a.m. and ended at midnight on school days, up to 18 hours of care. The provider billed every day of the month for both October and November 2021. The provider also billed 10 hours of care on November 31, which does not exist. ? The provider did not calculate correctly the number of hours provided. For two children in November 2021, the provider billed 10 hours of care for hours from 2:00 p.m. to 11:00 p.m., which is only 9 hours. The Agency did not review the November 2021 attendance calendars, and there were two additional families for which the provider billed hourly units instead of daily units. We also noted that this provider, which is licensed for 10 children, received over $146,000 in subsidy payments during Fiscal Year 2022, as well as $46,500 in Child Care Stabilization grant funds, despite the billing issues, being placed on probation, and large overpayments. Provider 2 The same ?Provider 2? included above was paid $2,332 for 55 daily units for the period of September 16, 2021, through September 30, 2021. This is impossible, as there are only 15 days during this period. A review of the attendance calendar supported 55 hours of care. The provider should have billed 55 hours at $7 per hour or $385. Provider 3 This provider submitted two claims for the same time period for the same child and received two payments of $330 and $385.90 for those duplicate claims. Both claims included 10 days of care from January 1, 2022, through January 15, 2022. The daily rate paid for one claim was $33, and the daily rate paid for the second claim was $38.59, which is the correct daily rate as of January 1, 2022. The issues noted above accumulated to $6,992 in Federal questioned costs. We also noted $2,430 in questioned costs used to meet match funds and $6,065 in general fund questioned costs. Cause: Ineffective review. The Agency does not have automated procedures to ensure attendance records agree to billing documents, service authorizations are not exceeded, and claims are in accordance with regulations. Effect: Ineffective review of claims increases the risk for errors and misuse of State and Federal funds. Recommendation: We recommend the Agency implement procedures to ensure payments are allowable, adequately supported, and in accordance with State and Federal regulations. We further recommend the Agency ensure billing documents agree with attendance sheets. We also recommend the Agency take the necessary action to recover the overpayments. Management Response: The Agency agrees.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Special Tests and Provisions Grant Number & Year: Various, including G2201NECCDF, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 98.41 (October 1, 2021), the State must have requirements to protect the health and safety of children, including the prevention and control of infectious diseases, building and physical premises safety, and health and safety training. Per 391 NAC 3-005.09A: The Department will make a fire inspection referral when: . . . 2. Every two years following the initial fire inspection[.] Per 391 NAC 3-005.09B: The Department will make a sanitation inspection referral when: . . . 2. Every two years following the initial sanitation inspection . . . [.] A good internal control plan requires that adequate documentation be maintained to support compliance with health and safety requirements. Condition: The Agency did not have adequate procedures in place to ensure health and safety requirements were met for child care providers. A similar finding was noted in the prior audit. Repeat Finding: 2021-044 Questioned Costs: None Statistical Sample: No Context: We tested 15 child care centers subject to fire and sanitation inspections. We noted the following: The Agency received a waiver for inspections for the period March 13, 2020, to September 30, 2021; however, for eight child care centers tested, a required inspection due during the waiver period still had not been performed as of the end of fieldwork on November 1, 2022. The Agency has made timely referrals for the fire and sanitation inspections; however, the inspections are overdue, and the Agency is ultimately responsible for ensuring that these inspections are performed. See Schedule of Findings and Questioned Costs for chart/table. Cause: Depending on the city or county, the Agency relies on local fire departments or the State Fire Marshal to conduct fire inspections for child care centers. The Agency makes a referral to the fire department when an inspection is due, but the Agency does not pay for these inspections and cannot control the timing of the inspections. Effect: Without adequate procedures to ensure health and safety requirements are met, there is an increased risk of noncompliance with Federal regulations and the possibility of children being cared for in unsafe facilities. Recommendation: We recommend the Agency implement procedures to ensure all health and safety requirements are met for child care centers. These procedures should include regular follow-up with the Fire Marshal or local fire departments and local health departments or the Environmental Health Agency to ensure the inspections are completed timely. Management Response: The Agency partially agrees with the finding. It is agreed that some sanitation and fire inspections have not been conducted every 2 years. These inspections are conducted by entities external to DHHS. Resources are an issue for these entities, which contributes to not meeting the regulatory timeframes for DHHS Children's Services Licensing. The Agency disagrees with the finding, in part, because DHHS has policy and procedure for making timely referrals, as required by regulations. DHHS has had extensive documented communication and follow up with these entities after the policy and procedure changes in 2020, 2021 and 2022; however, DHHS has no authority to require these entities to complete the inspections more promptly or release completed inspections when the licensee has not paid for the fire or sanitation inspection. DHHS will continue to implement policies and procedures: File Review by Child Care Licensing Supervisors and Fire and Sanitation Inspection Referrals. It is accurate that ?per 45 CFR ? 98.41 (October 1, 2020), the State must have requirements to protect the health and safety of children, including the prevention and control of infectious diseases, building and physical premises safety, and health and safety training.? DHHS disagrees that: ?The Agency did not have adequate procedures in place to ensure health and safety requirements were met for childcare providers.? Regulations 391 NAC 1-5 include robust requirements to address a healthy and safe environment that includes: environmental services and safety, physical plant standards, communicable diseases, children excluded due to illness, medications, food safety, emergency preparedness, safety training and nutrition and food service training. Child Care Inspection Specialists conduct inspections pursuant to these regulations, checking on compliance in the areas listed above, and these inspections are conducted once or twice annually as required by statute. It is important to note that if serious fire safety and sanitation concerns are observed at any inspection that may endanger the health and safety of children in care, it is standard practice to work with the appropriate authority to request an immediate inspection. Fire and sanitation have always responded timely to these requests. This has been a long standing policy and procedure in Children's Services Licensing specific to Family Child Care Homes I and II and is part of the child care licensing regulations. 391 NAC Chapters 1-5: 1-005.08 Inspection by Other Entities 2-005.09 Inspection by Other Entities 3-005.09 Inspections by Other Entities 4-005.09 Inspections by Other Entities 5-005.09 Inspections by Other Entities APA Response: The Agency is the recipient of the Federal funds and is, therefore, ultimately responsible to ensure that fire and sanitation inspections are performed. Without such inspections, there is an increased risk of children being cared for in unsafe facilities.
Program: AL 93.575 ? Child Care and Development Block Grant ? Period of Performance Grant Number & Year: G1901NECCDF, FFY 2019; G2001NECCDF, FFY 2020 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 98.60(d) (October 1, 2021): The following obligation and liquidation provisions apply to States and Territories: (1) Discretionary Fund allotments shall be obligated in the fiscal year in which funds are awarded or in the succeeding fiscal year. Unliquidated obligations as of the end of the succeeding fiscal year shall be liquidated within one year. * * * * (5) Obligations may include subgrants or contracts that require the payment of funds to a third party (e.g., subgrantee or contractor). However, the following are not considered third party subgrantees or contractors: (i) A local office of the Lead Agency; (ii) Another entity at the same level of government as the Lead Agency; or (iii) A local office of another entity at the same level of government as the Lead Agency. According to 45 CFR ? 75.511(a) (October 1, 2021), ?The auditee is responsible for follow-up and corrective action on all audit findings. As part of this responsibility, the auditee must prepare a summary schedule of prior audit findings.? Per 45 CFR ? 75.511(b), ?The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs.? 45 CFR ? 75.511(b)(1) adds, ?When audit findings were fully corrected, the summary schedule need only list the audit findings and state that corrective action was taken.? Finally, 45 CFR ? 75.511(b)(2) provides, ?When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken.? A good internal control plan requires procedures to ensure compliance with Federal regulations. Condition: Expenditures were charged to the FFY 2019 grant and FFY 2020 grant after the period of performance. A similar finding was noted in the prior audit. The Summary Schedule of Prior Findings lists the status as complete. Repeat Finding: 2021-045 Questioned Costs: $1,752,798 known ($50,227 #G1901NECCDF; $1,702,571 #2001NECCDF) Statistical Sample: No Context: The FFY 2019 Child Care Discretionary grant must be obligated by September 30, 2020. The Agency charged $5,275,001 to the FFY 2019 grant after September 30, 2020. We tested a payment to the Nebraska State Patrol paid in August 2021. The payment tested totaled $50,227 for background checks in June 2021. As other State agencies are not considered a third party, these costs were not obligated by September 30, 2020, and are considered questioned costs of $50,227. The FFY 2020 Child Care Discretionary grant must be obligated by September 30, 2021. We noted $1,702,571 paid from October 6, 2021, through June 29, 2022, for Agency employee payroll. Cause: Ineffective control procedures. Effect: Noncompliance with Federal regulations. Recommendation: We recommend the Agency improve procedures to ensure expenditures charged are within the allowed time period. Management Response: The Agency agrees.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Special Tests and Provisions Grant Number & Year: All open, including #G2201NECCDF, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 98.60(i) (October 1, 2021), ?Lead Agencies shall recover child care payments that are the result of fraud. These payments shall be recovered from the party responsible for committing the fraud.? Per 45 CFR ? 98.68(b) (October 1,2021), ?Lead Agencies are required to . . . (1) Identify fraud or other program violations . . . . (2) Investigate and recover fraudulent payments and to impose sanctions on clients or providers in response to fraud.? A good internal control plan requires procedures to ensure that cases are reviewed, and appropriate dispositions are made in a timely manner. Condition: Three of nine Child Care Special Investigation Unit (SIU) cases tested were not investigated in a timely manner. A similar finding was noted in the prior audit. Repeat Finding: 2021-046 Questioned Costs: Unknown Statistical Sample: No Context: Three SIU Child Care cases were not worked timely, as follows: ? One case was not worked between November 2020 through November 2021, or 13 months. ? A second case was not worked from December 2020 through February 2022, or 15 months. SIU was waiting for the overpayment to be established by the Fiscal Compliance Analyst. The overpayment totaling $9,075 was established in March 2022, and on June 9, 2022, the client was found guilty of the intentional program violation and disqualified from child care for 12 months. ? A third case was not worked between April 2021 through January 2022, 10 months. On April 7, 2022, the client was found guilty of the intentional program violation and disqualified from child care for 12 months. Cause: The Agency did not devote adequate resources to ensuring that child care fraud cases were worked in a timely manner. Effect: When cases are not completed timely, there is an increased risk of fraud or misuse of Federal funds. Failure to pursue potential fraud cases adequately results in noncompliance with Federal requirements. Recommendation: We recommend the Agency implement procedures to ensure that cases referred to the SIU are reviewed timely, and appropriate dispositions are made. Management Response: The Agency partially agrees with the finding. In regard to the cases in question, DHHS disagrees that no work was completed on the identified cases during the timeframes noted. DHHS acknowledges that it could not provide documentation of the work to prove actions were being completed. We would also like to point out that in the second case, the investigations unit was at the mercy of the overpayment team to establish the overpayment to finish the case. The investigations unit has no authority to direct the timeliness of the overpayment team. APA Response: The investigations unit and the overpayment team are within the same agency, so the investigations unit should notify management if there are issues with the overpayment team.
Program: AL 93.575 ? COVID-19 Child Care and Development Block Grant ? Special Tests and Provisions Grant Number & Year: 2101NECSC6, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 98.67(a) (October 1, 2021) states, ?Lead Agencies shall expend and account for CCDF [Child Care and Development Fund] funds in accordance with their own laws and procedures for expending and accounting for their own funds.? Per CCDF-ACF-IM-2021-02, issued 5-10-2021: Determining Stabilization Subgrant Award Amounts Child care provider subgrant amounts must: (1) be based on a provider?s stated current operating expenses, including costs associated with providing or preparing to provide child care services during the pandemic, and (2) to the extent practicable, cover sufficient operating expenses to ensure continuous operations for the intended period of the subgrant. Lead agencies have wide discretion on how subgrant amounts are formulated. To stabilize the child care sector during and after the COVID-19 public health emergency, lead agencies should limit the burden and bureaucracy on child care providers and ensure subgrants are sufficient in size and duration to support continuous operation. Lead agencies have several options for determining the operating costs of providers and the grant amounts, but should take into account the true cost of providing high-quality child care, including the costs of attracting and retaining a qualified and skilled workforce and the challenges of stable operations under the changing pandemic landscape. Some examples include: * * * * Use lead agency formulas based on general cost estimates for enrollment and age of children and region of operation. Enrollment and capacity should be used to estimate cost rather than attendance. Child care providers may provide enrollment and capacity data. Lead agencies may also already have some of this data through licensing systems and can prepopulate this data as part of a provider?s application. Child care providers must still confirm the data as part of the application. Good internal control requires that documentation be maintained to support the enrollment and capacity data used to determine subsidy amounts. Good internal control also requires procedures to ensure payments are in accordance with Federal and State requirements. Condition: The Child Care Stabilization Grant payment made to 4 of 25 providers tested was incorrect. Repeat Finding: No Questioned Costs: $16,000 known Statistical Sample: No Context: Section 2202 of the American Rescue Plan Act (ARPA) of 2021 provided states Federal funding in order to stabilize the child care sector in response to the COVID-19 public health emergency (PHE). The Agency issued over $98,000,000 in subgrants to eligible child care providers during fiscal year 2022. The subgrant funds were to be made available to qualified and eligible providers regardless of whether they had previously participated in the child care subsidy program. The Agency created a grant funding formula based on factors supporting those in underserved and lower-income areas of the state. This included providing additional funding for those providers serving children from families with low incomes. The Agency?s funding formula included a base amount awarded to providers based on their licensed capacity. An additional amount was awarded for the number of subsidy children the provider billed for in June 2021. The provider received an additional $2,000 for each subsidy child billed for in June 2021. The Agency provided a funding formula spreadsheet for each provider tested, which included a total number of subsidy children billed in June 2021 to whom the $2,000 bonus was applied. We asked for documentation supporting those subsidy numbers and were provided with another spreadsheet containing subsidy data for June 2021, but those numbers did not agree to the number of subsidy spots in the funding formula spreadsheet for several providers. We reviewed the child care subsidy claims in NFOCUS and counted each child that was billed in June 2021 and compared those numbers to what was included on the supporting documentation. We identified the following: See Schedule of Findings and Questioned Costs for chart/table. Federal payment errors noted for the sample tested were $16,000. The total Federal sample tested was $1,604,300, and the total child care stabilization grant payments for the fiscal year were $98,653,900. Based on the sample tested, the case error rate was 16% (4/25). The dollar error rate for the sample was 1% ($16,000/$1,604,300), which estimates the potential dollar risk for fiscal year 2022 to be $986,539 (dollar rate multiplied by the population). Cause: Lack of adequate supporting documentation for number of child care subsidy children billed. Effect: A lack of adequate supporting documentation increases the risk of payments not being in accordance with State and Federal requirements, leading to a loss of Federal funds. Recommendation: We recommend the Agency implement procedures to ensure that payments are adequately supported and in accordance with State and Federal requirements. Management Response: The Agency agrees.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Allowability & Eligibility Grant Number & Year: G2101NECCDF, FFY 2021; G2101NECCDM, FFY 2021; G2201NECCDF, FFY 2022; G2201NECCDM, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 42 USC ? 9858k(b) (1992) states, ?With regard to services provided to students enrolled in grades 1 through 12, no financial assistance provided under this subchapter shall be expended for ? (1) any services provided to such students during the regular school day[.]? To be eligible for services, 45 CFR ? 98.20 (October 1, 2021) requires a child to be under 13 years of age, a citizen, and reside with a family whose income does not exceed 85% of the State?s median income. 45 CFR ? 98.55 (October 1, 2021) states: (a) Federal matching funds are available for expenditures in a State based upon the formula specified at ? 98.63(a). (b) Expenditures in a State under paragraph (a) of this section will be matched at the Federal medical assistance rate for the applicable fiscal year for allowable activities, as described in the approved State Plan, that meet the goals and purposes of the Act. 45 CFR ? 98.67(a) (October 1, 2021) states ?Lead Agencies shall expend and account for CCDF [Child Care and Development Fund] funds in accordance with their own laws and procedures for expending and accounting for their own funds.? Title 392 NAC 3-004.01(A) (Eff. 9/15/2020) states, ?The Department pays by attendance, not enrollment. Providers do not receive payment when the provider is on vacation, is ill, or is not providing care for some reason unrelated to the child or recipient.? Title 392 NAC 3-004.01(A)(i) (Eff. 9/15/2020) states, ?The provider may bill the full authorized amount for times that the child is absent on a scheduled day, up to five times per month.? Title 392 NAC 3-001.02(D) (Eff. 9/15/2020) states, ?The recipient and child care provider must ensure that the services are delivered as authorized.? Title 392 NAC 4-002. (Eff. 9/15/2020) states, in relevant part, ?Before furnishing any service, each provider must sign an enrollment form agreeing: (A) No payments will be made for child care provided to a child before the service authorization date;? and ?(G) To retain authorizations, billing documents, and attendance records for four years to support and document all claims[.]? Title 392 NAC 2-011.02 (Eff. 9/15/2020) states, in part, ?The parent of a child who is a ward of the Department or the parent of a tribal ward who attests the parent is unable to receive child care services from the tribe, is eligible for services without regard to income . . . .? Title 392 NAC 1-001 (Eff. 9/15/2020) provides the following definitions for age levels of care: 001.13 INFANT. A child age six weeks to 18 months. 001.21 PRESCHOOLER. A child age 36 months to school-age. 001.26 SCHOOL-AGED CHILD. A child who attends kindergarten or above. 001.31 TODDLER. A child age 18 months to 36 months. Neb. Rev. Stat. ? 68-1206 (Supp. 2021) provides, in part, the following: (2)(a) [T]he department shall participate in the federal child care assistance program under 42 U.S.C. 9857 et seq., . . . and provide child care assistance to families with incomes up to (i) one hundred eighty-five percent of the federal poverty level prior to October 1, 2023 . . . . (b) [I]n determining ongoing eligibility, if a family?s income exceeds one hundred eighty-five percent of the federal poverty level prior to October 1, 2023, . . . the family shall receive transitional child care assistance through the remainder of the family?s eligibility period or until the family?s income exceeds eighty-five percent of the state median income for a family of the same size as reported by the United States Bureau of the Census, whichever occurs first. . . . The amount of such child care assistance shall be based on a cost-shared plan between the recipient family and the state and shall be based on a sliding-scale methodology. A recipient family may be required to contribute a percentage of such family?s gross income for child care . . . . The Child Care Provider Handbook (Handbook), issued by the Agency in January of 2008, states, in relevant part, ?You must complete the Attendance Calendar to accurately reflect the dates on which child care services were provided as well as the exact number of hours of service provided. For each day, partial hours of service provided should be rounded up to the next quarter hour[.]? (pg. 10) The Handbooks defines ?Full Day of Care? as follows: ?Five hours and 46 minutes (6 hours) through 9 hours (9 hours and 59 minutes) unless the child care program defines its day as more than 9 hours.? (pg. 1) The Handbook also states, ?Hourly or daily units listed on the Authorization are for the total time frame of the Authorization period - less than 6 hours are hourly units - 6 hours or more are daily units[.]? (pg. 8) Good internal control requires procedures to ensure that payments are in accordance with Federal and State requirements. Condition: Child care payments did not comply with Federal and State requirements. A similar finding has been noted in our previous audit reports since 2007. Repeat Finding: 2021-043 Questioned Costs: $9,556 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: We tested 25 child care claims paid with Federal funds and 5 child care claims paid with matching general funds. We noted 11 claims with errors. Some payments had more than one type of error. ? For seven claims tested, there were discrepancies between the attendance sheet and the claim billed: o For one claim, the provider billed a day of child care when the provider was closed in observation of the July 4th holiday. o For one claim, the provider billed an absent day on a Saturday when the child did not normally attend on weekends. o For three claims, the provider billed for more hours and/or days than what was recorded on the child?s attendance sheet: ? One provider billed 36 hours and one day, while the attendance sheet showed the child attended 32 hours and one day. ? One provider billed for 12 days of care, while the attendance sheet showed only 11 days of care. ? One provider billed for 16 days when the attendance sheet showed only 15 days of care. o For two claims tested, the providers billed a full day of care when only 5.75 hours should have been billed. One provider did this for four different days on the claim. ? For two claims tested, the rate charged for child care was higher than what is allowed per the child?s age: o For one claim, the child started kindergarten in August 2021 and should have been billed at the school age rate; however, the provider was billing at the preschool rate. Child care was billed at the preschool rate through the end of the fiscal year, and the child was still authorized at a preschool rate at the time of testing in September 2022. o For one claim, the child should have been billed at a preschool rate but was billed at a toddler rate through our audit period. ? For one claim, the provider charged for a full day of care on a school day that the child would have been in school. ? For one claim, the provider billed more child care than what was authorized. A maximum of 25 hours of care were authorized per week; however, the provider billed care 5 days a week (i.e., 30+ hours/week) for the child. ? On one claim, there was a Child Support Court Order requiring child care expenses to be split 48/52 between the mother and the father of the child, respectively. Therefore, the mother should be responsible for only 48% of the child care costs, and the State should be providing subsidy assistance for only her portion of the costs (as she was the only parent applying for benefits). Instead, 100% of the remaining child care costs were being subsidized, after the family fee was applied. ? For one claim tested, the family?s income was calculated incorrectly, and the family should not have qualified for child care until March 2022, when the mother quit her job. The Agency should have calculated the mother?s monthly income as $2,728. Instead, the Agency used $0 for the mother?s income, even though she was employed by the Agency. Had the correct income been used, the family would not have been eligible for the child care subsidy program. ? One child was in Tribal Court custody and had been placed with a foster parent. There was no attest from the foster parent indicating that she could not receive child care services from the tribe. Federal payment errors noted for the sample tested were $471. The total Federal sample tested was $8,086, and total child care Federal assistance claims for the fiscal year were $37,138,666. The dollar rate for the sample was 5.82% ($471/8,086), which estimates the potential dollar risk for the fiscal year 2022 to be $2,161,470 (dollar rate multiplied by the population). In addition to the $471 Federal questioned costs noted on the sample items tested, we also noted $2,093 of Federal questioned costs on other line items of the claims reviewed and $3,317 questioned costs used to meet match, which resulted from miscalculated budgets, service authorizations exceeded, and incorrect rate charges. Unusual Claims Tested We reviewed the detail of child care claims for unusual items, such as over 300 hours billed in a month, more than 31 days billed in a month, and duplicate claims. We noted the following issues with the claims tested for the following three providers: Provider 1 This provider billed for 300 hourly units for several children during October and November 2021. The provider incorrectly billed hourly units instead of daily units, inflating the payment amount received. The Agency reviewed the provider?s attendance calendars for August 2021, September 2021, and October 2021 and established overpayments on January 22, 2022, totaling $10,595 for this incorrect billing. However, the Agency failed to identify a second provider that also billed for one of the families in October and November 2021. We reviewed the attendance calendars for both providers and identified the following issues: ? There were 336.75 hours in October and 175.5 hours in November 2021 that overlapped between the two providers. The following chart includes an example of overlapping hours billed on October 1, 2021. See Schedule of Findings and Questioned Costs for chart/table. ? Hours of care provided exceeded the service authorizations. The service authorizations covering October 2021 for both providers stated that child care was authorized up to 40 hours per week. A new service authorization issued for November 2021 authorized child care up to 45 hours per week, and hours were to be split between the primary and secondary provider. Provider 1 billed full-time for all four children during October and November 2021, with weekly hours billed ranging from 60 hours up to 126 hours. The following chart shows the total number of weekly hours each child was in care for both providers in October 2021. See Schedule of Findings and Questioned Costs for chart/table. ? The hours of care billed were not reasonable. In October 2021, the client was authorized for job search; however, hours of care began at 6:00 a.m. and ended at midnight on school days, up to 18 hours of care. The provider billed every day of the month for both October and November 2021. The provider also billed 10 hours of care on November 31, which does not exist. ? The provider did not calculate correctly the number of hours provided. For two children in November 2021, the provider billed 10 hours of care for hours from 2:00 p.m. to 11:00 p.m., which is only 9 hours. The Agency did not review the November 2021 attendance calendars, and there were two additional families for which the provider billed hourly units instead of daily units. We also noted that this provider, which is licensed for 10 children, received over $146,000 in subsidy payments during Fiscal Year 2022, as well as $46,500 in Child Care Stabilization grant funds, despite the billing issues, being placed on probation, and large overpayments. Provider 2 The same ?Provider 2? included above was paid $2,332 for 55 daily units for the period of September 16, 2021, through September 30, 2021. This is impossible, as there are only 15 days during this period. A review of the attendance calendar supported 55 hours of care. The provider should have billed 55 hours at $7 per hour or $385. Provider 3 This provider submitted two claims for the same time period for the same child and received two payments of $330 and $385.90 for those duplicate claims. Both claims included 10 days of care from January 1, 2022, through January 15, 2022. The daily rate paid for one claim was $33, and the daily rate paid for the second claim was $38.59, which is the correct daily rate as of January 1, 2022. The issues noted above accumulated to $6,992 in Federal questioned costs. We also noted $2,430 in questioned costs used to meet match funds and $6,065 in general fund questioned costs. Cause: Ineffective review. The Agency does not have automated procedures to ensure attendance records agree to billing documents, service authorizations are not exceeded, and claims are in accordance with regulations. Effect: Ineffective review of claims increases the risk for errors and misuse of State and Federal funds. Recommendation: We recommend the Agency implement procedures to ensure payments are allowable, adequately supported, and in accordance with State and Federal regulations. We further recommend the Agency ensure billing documents agree with attendance sheets. We also recommend the Agency take the necessary action to recover the overpayments. Management Response: The Agency agrees.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Special Tests and Provisions Grant Number & Year: Various, including G2201NECCDF, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 98.41 (October 1, 2021), the State must have requirements to protect the health and safety of children, including the prevention and control of infectious diseases, building and physical premises safety, and health and safety training. Per 391 NAC 3-005.09A: The Department will make a fire inspection referral when: . . . 2. Every two years following the initial fire inspection[.] Per 391 NAC 3-005.09B: The Department will make a sanitation inspection referral when: . . . 2. Every two years following the initial sanitation inspection . . . [.] A good internal control plan requires that adequate documentation be maintained to support compliance with health and safety requirements. Condition: The Agency did not have adequate procedures in place to ensure health and safety requirements were met for child care providers. A similar finding was noted in the prior audit. Repeat Finding: 2021-044 Questioned Costs: None Statistical Sample: No Context: We tested 15 child care centers subject to fire and sanitation inspections. We noted the following: The Agency received a waiver for inspections for the period March 13, 2020, to September 30, 2021; however, for eight child care centers tested, a required inspection due during the waiver period still had not been performed as of the end of fieldwork on November 1, 2022. The Agency has made timely referrals for the fire and sanitation inspections; however, the inspections are overdue, and the Agency is ultimately responsible for ensuring that these inspections are performed. See Schedule of Findings and Questioned Costs for chart/table. Cause: Depending on the city or county, the Agency relies on local fire departments or the State Fire Marshal to conduct fire inspections for child care centers. The Agency makes a referral to the fire department when an inspection is due, but the Agency does not pay for these inspections and cannot control the timing of the inspections. Effect: Without adequate procedures to ensure health and safety requirements are met, there is an increased risk of noncompliance with Federal regulations and the possibility of children being cared for in unsafe facilities. Recommendation: We recommend the Agency implement procedures to ensure all health and safety requirements are met for child care centers. These procedures should include regular follow-up with the Fire Marshal or local fire departments and local health departments or the Environmental Health Agency to ensure the inspections are completed timely. Management Response: The Agency partially agrees with the finding. It is agreed that some sanitation and fire inspections have not been conducted every 2 years. These inspections are conducted by entities external to DHHS. Resources are an issue for these entities, which contributes to not meeting the regulatory timeframes for DHHS Children's Services Licensing. The Agency disagrees with the finding, in part, because DHHS has policy and procedure for making timely referrals, as required by regulations. DHHS has had extensive documented communication and follow up with these entities after the policy and procedure changes in 2020, 2021 and 2022; however, DHHS has no authority to require these entities to complete the inspections more promptly or release completed inspections when the licensee has not paid for the fire or sanitation inspection. DHHS will continue to implement policies and procedures: File Review by Child Care Licensing Supervisors and Fire and Sanitation Inspection Referrals. It is accurate that ?per 45 CFR ? 98.41 (October 1, 2020), the State must have requirements to protect the health and safety of children, including the prevention and control of infectious diseases, building and physical premises safety, and health and safety training.? DHHS disagrees that: ?The Agency did not have adequate procedures in place to ensure health and safety requirements were met for childcare providers.? Regulations 391 NAC 1-5 include robust requirements to address a healthy and safe environment that includes: environmental services and safety, physical plant standards, communicable diseases, children excluded due to illness, medications, food safety, emergency preparedness, safety training and nutrition and food service training. Child Care Inspection Specialists conduct inspections pursuant to these regulations, checking on compliance in the areas listed above, and these inspections are conducted once or twice annually as required by statute. It is important to note that if serious fire safety and sanitation concerns are observed at any inspection that may endanger the health and safety of children in care, it is standard practice to work with the appropriate authority to request an immediate inspection. Fire and sanitation have always responded timely to these requests. This has been a long standing policy and procedure in Children's Services Licensing specific to Family Child Care Homes I and II and is part of the child care licensing regulations. 391 NAC Chapters 1-5: 1-005.08 Inspection by Other Entities 2-005.09 Inspection by Other Entities 3-005.09 Inspections by Other Entities 4-005.09 Inspections by Other Entities 5-005.09 Inspections by Other Entities APA Response: The Agency is the recipient of the Federal funds and is, therefore, ultimately responsible to ensure that fire and sanitation inspections are performed. Without such inspections, there is an increased risk of children being cared for in unsafe facilities.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Special Tests and Provisions Grant Number & Year: All open, including #G2201NECCDF, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 98.60(i) (October 1, 2021), ?Lead Agencies shall recover child care payments that are the result of fraud. These payments shall be recovered from the party responsible for committing the fraud.? Per 45 CFR ? 98.68(b) (October 1,2021), ?Lead Agencies are required to . . . (1) Identify fraud or other program violations . . . . (2) Investigate and recover fraudulent payments and to impose sanctions on clients or providers in response to fraud.? A good internal control plan requires procedures to ensure that cases are reviewed, and appropriate dispositions are made in a timely manner. Condition: Three of nine Child Care Special Investigation Unit (SIU) cases tested were not investigated in a timely manner. A similar finding was noted in the prior audit. Repeat Finding: 2021-046 Questioned Costs: Unknown Statistical Sample: No Context: Three SIU Child Care cases were not worked timely, as follows: ? One case was not worked between November 2020 through November 2021, or 13 months. ? A second case was not worked from December 2020 through February 2022, or 15 months. SIU was waiting for the overpayment to be established by the Fiscal Compliance Analyst. The overpayment totaling $9,075 was established in March 2022, and on June 9, 2022, the client was found guilty of the intentional program violation and disqualified from child care for 12 months. ? A third case was not worked between April 2021 through January 2022, 10 months. On April 7, 2022, the client was found guilty of the intentional program violation and disqualified from child care for 12 months. Cause: The Agency did not devote adequate resources to ensuring that child care fraud cases were worked in a timely manner. Effect: When cases are not completed timely, there is an increased risk of fraud or misuse of Federal funds. Failure to pursue potential fraud cases adequately results in noncompliance with Federal requirements. Recommendation: We recommend the Agency implement procedures to ensure that cases referred to the SIU are reviewed timely, and appropriate dispositions are made. Management Response: The Agency partially agrees with the finding. In regard to the cases in question, DHHS disagrees that no work was completed on the identified cases during the timeframes noted. DHHS acknowledges that it could not provide documentation of the work to prove actions were being completed. We would also like to point out that in the second case, the investigations unit was at the mercy of the overpayment team to establish the overpayment to finish the case. The investigations unit has no authority to direct the timeliness of the overpayment team. APA Response: The investigations unit and the overpayment team are within the same agency, so the investigations unit should notify management if there are issues with the overpayment team.
Program: AL 93.558 ? Temporary Assistance to Needy Families; AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.658 ? Foster Care Title IV-E ? Allowable Cost/Cost Principles Grant Number & Year: 1901NETANF, FFY 2019; 2101NEFOST, FFY 2021; 2201NEFOST, FFY 2022; 202121S251443, FFY 2021; 202222S251443, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 200.303 (January 1, 2022): The non-Federal entity must: (a) Establish and maintain effective internal control the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per the CAP, ?The RMTS Administrator is an employee of the Division of Children and Family Services and is responsible for . . . . verification that all forms are submitted to the Completed Surveys database, review of the worker entries to validate consistent practice among participants . . . .? Per the CAP, ?Each worker should be trained in the completion of the observation form and to the importance of providing accurate and timely responses.? According to RMTS Explanations: 1. Case Work ? Select this item if you were working on a specific case at the observation time. If you select this item you will be asked to enter the NFOCUS master case number. If there is not an NFOCUS master case, use any other number or description that can be used to identify the case . . . . According to the RMTS Instructions for the Worker: ?After the observation form has been submitted and validated (if selected for validation), it is reviewed by a member of the CFS and Cost Accounting Office for consistency.? According to the RMTS Instructions for the Supervisor: ?If you agree with the worker?s selections, you can click the ?VALIDATION? button. If you do not agree with the worker?s selections, you need to confer with the worker on the selection process and reach agreement on the proper selections for the form. Make updates as needed, and click the ?VALIDATION? button to attach the supervisor?s electronic signature and validate the form.? Good internal control and sound accounting practices require procedures to ensure that staff know how to complete accurate random moment time studies, which are used to allocate costs to Federal programs. Condition: The Agency did not have adequate procedures to ensure the accuracy of the RMTS. A similar finding was noted in the prior audit. Repeat Finding: 2021-033 Questioned Costs: $14,131 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The RMTS is conducted on an ongoing basis to provide data for the allocation of direct and indirect costs to various programs. The objective is to identify employee efforts directly related to programs administered by the Agency. We tested 48 validated RMTS observations and noted that inadequate documentation was provided on 11 of them. We noted the following: ? For two of four Foster Care IV-E observations tested, the observations should have been reported as Foster Care Non IV-E per the documentation in the case files. For one of these observations, the case worker noted in the comments that she selected the wrong option. However, it was still validated without correction. ? For five of 21 SNAP observations tested, the RMTS observation form appeared to have been completed incorrectly by the case worker. For two of these observations, the case worker selected the SNAP program; however, per the case files, the case worker appeared to be working on other programs along with SNAP at the time of the observation or was not working on SNAP at all at the time of the observation. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. For the other three observations, the case workers did not document which cases they were working on. ? For four of 12 TANF observations tested, the RMTS observation forms appeared to have been completed incorrectly by the case workers. The case workers selected the TANF program; however, per the case files, the case workers appeared to be working on other programs along with TANF at the time of the observation, or, for one case, not working on TANF at all. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. Total known Federal payment errors, amount tested, error rate (amount of errors/ amount tested), total dollars charged via RMTS, and potential dollars at risk (dollar rate multiplied by the population total dollars charged) are summarized below by program: See Schedule of Findings and Questioned Costs for chart/table. The APA also inquired with Agency staff to determine if they were provided training in how to complete the random moment time studies. For one individual, the Agency was unable to provide documentation to support that the employee selected had completed RMTS training. Cause: The Agency?s training of staff and supervisory reviews of RMTS observations were not sufficient to ensure the observations were accurately completed. Effect: Random moment sampling is based on the laws of probability, which state, in essence, that there is a high probability that a relatively small number of random observations will yield an accurate depiction of the overall characteristics of the population for which the sample was taken. If RMTS observations are not accurate, there is an increased risk costs will be allocated incorrectly between programs. Recommendation: We recommend the Agency improve procedures to ensure that random moment observations are accurate and adequately reviewed. Management Response: The Agency agrees.
Program: Various, including AL 84.010 ? Title I Grants to Local Educational Agencies; AL 93.568 ? Low-Income Home Energy Assistance (LIHEAP); and AL 93.659 ? Adoption Assistance ? Cash Management Grant Number & Year: Various Federal Grantor Agency: Various Criteria: 31 CFR ? 205.12 (July 1, 2021) states, in part, the following: (a) We and a State may negotiate the use of mutually agreed upon funding techniques. We may deny interest liability if a State does not use a mutually agreed upon funding technique. Funding techniques should be efficient and minimize the exchange of interest between States and Federal agencies. (b) We and a State may base our agreement on the sample funding techniques listed in paragraphs (b)(1) through (b)(5) of this section . . . . * * * * (3) Average clearance means that a Federal Program Agency, on the dollar-weighted average day of clearance of a disbursement, transfers to a State a lump sum equal to the actual amount of funds that the State is paying out. The dollar-weighted average day of clearance is the day when, on a cumulative basis, 50 percent of the funds have been paid out. The dollar-weighted average day of clearance is calculated from a clearance pattern, consistent with ?205.20. Per 31 CFR ? 205.19(e) (July 1, 2021) states, in part, the following: A State may use actual data, a clearance pattern, or statistical sampling to calculate interest. A clearance pattern used to calculate interest must meet the standards of ? 205.20. Per 31 CFR ? 205.20 (July 1, 2021): States use clearance patterns to project when funds are paid out, given a known dollar amount and a known date of disbursement. A State must ensure that clearance patterns meet the following standards: * * * * (b) A clearance pattern must accurately represent the flow of Federal funds under the Federal assistance programs to which it is applied. Per 31 CFR ? 205.22(b) (July 1, 2021): An authorized State official must certify that a clearance pattern corresponds to the clearance activity of the Federal assistance program which it is applied. An authorized State official must re-certify the accuracy of a clearance pattern at least every five years. . . . A State can begin to use a new clearance pattern on the date the new clearance pattern is certified. Condition: The Agency lacked adequate procedures to ensure that Federal funds were drawn in compliance with the Treasury Service Agreement (TSA). Repeat Finding: No Questioned Costs: N/A Statistical Sample: No Context: Twelve programs for the State use ?Average Clearance? to request Federal funds. For Average Clearance, the funds are requested so that they are deposited on the dollar-weighted average day of clearance for the disbursement. Clearance patterns are recalculated every five years. The Agency uses historical data to determine the number of days each check was outstanding (clearance time). The clearance time is multiplied by the percentage of total disbursements for those checks, and a dollar-weighted average day of clearance is determined by summing the clearance factor for each day. A clearance pattern of 3.43 days would have 57% of funds deposited on day three and 43% deposited on day four. On December 14, 2021, the Agency and the U.S. Department of the Treasury signed the TSA, establishing the Letter of Credit clearance patterns to be used for the period of July 1, 2021, through June 30, 2022. As of the date of the APA?s review in November 2022, however, the Agency had not yet updated the Delay of Draw (DOD) system to reflect these clearance patterns. Consequently, the Agency continued to draw Federal funds using the fiscal year 2021 clearance patterns, some of which were last calculated in fiscal year 2016. The APA identified three Federal programs that were drawing Federal funds at a faster rate than allowed by the TSA. ? AL 84.010 draws funds through multiple DOD #?s, including DOD #0999. DOD #0999 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.43 days for fiscal year 2022. This resulted in the early draw of 43% of AL 84.010 funds drawn through DOD #0999. ? AL 93.568 draws funds through multiple DOD #?s, including DOD #2761. DOD #2761 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.37 days for fiscal year 2022. This resulted in the early draw of 37% of AL 93.568 funds drawn through DOD #2761. ? AL 93.659 draws funds through multiple DOD #?s, none of which were properly updated from a 3-day clearance pattern to the certified clearance pattern of 4.24 days. This resulted in the early draw of AL 93.659 funds by 1.24 days. During testing of 25 Federal deposits, we noted the following: ? For one deposit tested, the Agency drew down $117,779 more in Federal funds than there were recorded as expenditures in E1, the State?s accounting system. The Agency held these funds throughout the fiscal year, continuing to do so until the APA raised concerns about them. See Schedule of Findings and Questioned Costs for chart/table. ? Due to the previously noted error in updating the DOD system, for 2 of 25 Federal draws tested, the APA noted that the Agency drew Federal funds earlier than were allowed under the TSA. As the State would have been entitled to the overdrawn funds the following day, there are no questioned costs. See Schedule of Findings and Questioned Costs for chart/table. Cause: Inadequate review of drawdowns. Agency staff stated that they had not had time to update the clearance patterns in the DOD system. Effect: Without adequate procedures to ensure that Federal drawdowns comply with the TSA, there is an increased risk of noncompliance with Federal requirements, which could lead to interest penalties and sanctions. Recommendation: We recommend the Agency strengthen its procedures for ensuring that clearance patterns are updated in a timely manner to comply with the TSA, and draws are supported by expenditures in the accounting system. Management Response: Management agrees with the finding and has updated clearance patterns to align with the most recent TSA agreement.
Program: Various, including AL 93.767 ? Children's Health Insurance Program, AL 93.778 ? Medical Assistance Program ? Reporting Grant Number & Year: Various, including #2105NE5021, FFY 2021; #2105NE5ADM, FFY 2021 Federal Grantor Agency: Various, including U.S. Department of Health and Human Services Criteria: A good internal control plan requires adequate procedures to ensure the Schedule of Expenditures of Federal Awards (SEFA) is properly presented. Title 45 CFR ? 75.510(b) (October 1, 2021) and Title 2 CFR ? 200.510(b) (January 1, 2022) state, in part, the following: The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended . . . . At a minimum, the schedule must: * * * * (3) Provide total Federal awards expended for each individual Federal program . . . (4) Include the total amount provided to subrecipients from each Federal program. Neb. Rev. Stat. ? 81-1111(1) (Reissue 2014) states, in part, the following: Subject to the supervision of the Director of Administrative Services, the Accounting Administrator shall have the authority to prescribe the system of accounts and accounting to be maintained by the state and its departments and agencies, develop necessary accounting policies and procedures, coordinate and approve all proposed financial systems, and manage all accounting matters of the state's central system. EnterpriseOne (E1) is the official accounting system of the State. Condition: Several programs did not have expenditures or the amount provided to subrecipients accurately reported on the SEFA. We notified Administrative Services of the errors, and the SEFA was subsequently adjusted. A similar finding was noted in the prior audit. Repeat Finding: 2021-025 Questioned Costs: None Statistical Sample: No Context: Administrative Services is responsible for managing the accounting matters of the State and certifies the data collection form for the Statewide Single Audit. Administrative Services compiles the SEFA from information obtained from the individual agencies, which is then submitted to the APA. During our review, we noted the following: The Department of Health and Human Services (DHHS) did not accurately report expenditures for several programs, including underreporting AL 93.767 by $16,394,237 and overreporting AL 93.778 by $13,908,580. The Department of Military underreported AL 97.036 by $41,491,068. The Department of Labor overreported AL 17.225 by $5,286,008. Several agencies did not properly identify COVID-19 expenditures. Twenty-seven programs for various State agencies needed correction. The total expenditures and amounts provided to subrecipients originally reported and per the final SEFA were as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: Administrative Services lacked adequate procedures for ensuring the accuracy of amounts not obtained directly from the accounting system. Administrative Services established a specific account code for aid to subrecipients, but not all agencies utilized this code. Effect: Increased risk for the SEFA to be inaccurate, which could lead to Federal sanctions or programs not being audited that should be. Recommendation: We recommend Administrative Services improve procedures to ensure the SEFA is complete and accurate. Management Response: We will continue to work with State teammates to ensure the SEFA is accurate and complete. The original total SEFA expenditures were 99.3% accurate.
Program: AL 93.778 ? Medical Assistance Program; AL 93.767 ? Children?s Health Insurance Program (CHIP) ? Special Tests and Provisions Grant Number & Year: All open, including #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per Title 42 CFR ? 455.104(b)(4) (October 1, 2021), the State Medicaid Agency must require the disclosing entity to provide the following disclosures: The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). Per 42 ? CFR 455.101 (October 1, 2021): Managing employee means a general manager, business manager, administrator, director, or other individual who exercises operational or managerial control over, or who directly or indirectly conducts the day-to-day operation of an institution, organization, or agency. Per the Medicaid Provider Enrollment Compendium (MPEC) (3/22/21), Section 1.4.1C: There are not exceptions to the managing employee disclosure requirement. To the extent any individual meets the definition of ?managing employee? under ?455.101, their information is required to be disclosed. Section 1.4.1C of the MPEC also contains the following: d. Non-Profit Entities Non-profit entities generally do not have owners unless state law permits such ownership. However, if a non-profit entity has managing employees, to the extent these individuals meet the definition of ?managing employee? under ? 455.101; they would have to be disclosed as such. In addition, as discussed further below, entities, including non-profit entities, that are organized as corporations must provide disclosures regarding their officers and directors. e. Government-Owned Entities There is not an exception for government-owned entities. Government-owned entities likewise need to disclose anyone meeting the definition of ?managing employee,? and would only need to disclose board members if the entity was organized as a corporation or if that individual meets the definition of ?managing employee.? See 1.4.C.1.d ?Managing Employee Disclosure.? Per 42 CFR ? 455.436 (October 1, 2021), the State Medicaid Agency must do the following: (a) Confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. (b) Check the Social Security Administration?s Death Master File, the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. (c)(1) Consult appropriate databases to confirm identity upon enrollment and reenrollment; and (2) Check the LEIE and EPLS no less frequently than monthly. 45 CFR ? 75.303 (October 1, 2021) requires the Agency to ?[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? 45 CFR ? 75.511(b) (October 1, 2021) states, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that all required disclosures are provided. Condition: Three of 25 providers tested did not include disclosure requirements for managing employees. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-051 Questioned Costs: Unknown Statistical Sample: No Context: We tested screening and enrollment for 25 Medicaid/CHIP providers. We noted that three providers, a public school, a non-profit corporation, and a for-profit corporation, failed to disclose any managing employee. Therefore, no screenings for managing employees were performed for these three providers. Cause: The Agency relies on each provider?s disclosure to be complete, true, and accurate. The provider is allowed to complete the enrollment process even if an owner or managing employee is not disclosed. Effect: Without adequate procedures to ensure providers are screened, and disclosures are complete, there is an increased risk of provider ineligibility, which could result in unallowable costs or potential harm to patients. Recommendation: We recommend the Agency obtain disclosures and screen providers as required by Federal regulations. Management Response: The Agency partially agrees with the finding. The federal regulations and MPEC require that the SMA obtain the disclosure of managing employees, that providers disclose the information, and that the SMA screen the information that is disclosed. The federal law and MPEC do not mandate that a provider must have at least one managing employee. When enrolling and revalidating their agreements, providers are directed to disclose owners and managing employees. If they fail to enter managing employee information and attempt to submit their agreement, they are directed to verify their entry and correct before submitting. It is up to the provider to determine if they have managing employees and disclose them. If the Department learns that a provider has managing employees that have not been disclosed, the provider will be directed to update their provider agreement or face sanctions. APA Response: It is not sufficient for the Agency to rely on the provider?s disclosures. Obvious errors and omissions should be reviewed to ensure compliance with Federal regulations.
Program: Various, including AL 93.778 ? Medical Assistance Program ? Allowable Costs/Cost Principles Grant Number & Year: Various, including #2105NE5ADM, FFY 2021 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 2 CFR ? 200.403 (January 1, 2022) and 45 CFR ? 75.403 (October 1, 2021) state, in relevant part, the following: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: * * * * (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. * * * * (g) Be adequately documented. 2 CFR ? 200.405(b) (January 1, 2022) and 45 CFR ? 75.405(b) (October 1, 2021) state, in relevant part, the following: All activities which benefit from the non-Federal entity?s indirect (F&A) cost, including unallowable activities and donated services by the non-Federal entity or third parties, will receive an appropriate allocation of indirect costs. 2 CFR ? 200.444(a) (January 1, 2022) and 45 CFR ? 75.444(a) (October 1, 2021) state, in relevant part, the following: For states, local governments, and Indian Tribes, the general costs of government are unallowable ?.Unallowable costs include: (1) Salaries and expenses of the Office of the Governor of a state . . . [.] (2) Salaries and other expenses of a state legislature . . . [.] 2 CFR ? 200, Appendix V, subsection (G)(2), (January 1, 2022) and 45 CFR ? 75, Appendix V, subsection (G)(2), (October 1, 2021) state the following: Internal service funds are dependent upon a reasonable level of working capital reserve to operate from one billing cycle to the next. Charges by an internal service activity to provide for the establishment and maintenance of a reasonable level of working capital reserve, in addition to the full recovery of costs, are allowable. A working capital reserve as part of retained earnings of up to 60 calendar days cash expenses for normal operating purposes is considered reasonable. A working capital reserve exceeding 60 calendar days may be approved by the cognizant agency for indirect costs in exceptional cases. 2 CFR ? 200, Appendix V, subsection (G)(4), (January 1, 2022) and 45 CFR ? 75, Appendix V, subsection (G)(4), (October 1, 2021) state, in relevant part, the following: Billing rates used to charge Federal awards must be based on the estimated costs of providing the services, including an estimate of the allocable central service costs. A comparison of the revenue generated by each billed service (including total revenues whether or not billed or collected) to the actual allowable costs of the service will be made at least annually and an adjustment will be made for the difference between the revenue and the allowable costs. These adjustments will be made through one of the following adjustment methods: (a) a cash refund including earned or imputed interest from the date of transfer and debt interest, if applicable, chargeable in accordance with applicable Federal cognizant agency for indirect costs regulations to the Federal Government for the Federal share of the adjustment, (b) credits to the amounts charged to the individual programs, (c) adjustments to future billing rates, or (d) adjustments to allocated central service costs. A good internal control plan requires: ? Procedures to ensure rate charges are equitable, reflect actual costs incurred, and are reviewed periodically to ensure such charges are appropriate for the services provided. ? Maintenance of adequate documentation to support both rates charged and the approval of those rates. ? Periodic review of internal service fund balances to ensure revenues are not in excess of expenses. ? Internal service rates that are published and available for State agency review and applied consistently for all State agencies. Condition: The Agency did not have adequate documentation to support the allocation of security costs in developing building rental rates. Additionally, the Agency?s Material Division did not maintain adequate documentation to support that charges were reasonable, equitable, and consistently applied. A similar finding was noted in prior audits since 2015. Lastly, the Accounting Internal Service Fund balance was greater than 60 calendar days for cash expenses for normal operations incurred. A similar finding was noted in the prior audit. Repeat Finding: 2021-024 Questioned Costs: Unknown Statistical Sample: No Context: We noted the following: Building Division The rental rate charged to agencies for building space includes an allocation for indirect costs for administration, grounds keeping, security, and energy management. We noted that neither the State Capitol nor the Governor?s residence were allocated any costs for security, even though there is security at both locations. Because these locations were not allocated any security costs, Federal programs could be overcharged. Additionally, security costs to the State Capitol and the Governor?s residence are general costs of government and, therefore, not allowable. The fiscal year 2022 indirect allocations for security totaled $884,797. Material Division We tested three Print Shop billings and noted the following: ? In prior audits, we noted that 24 Print Shop rates were based on calculations from fiscal year 2008, and 3 other Print Shop rates were based on calculations from fiscal year 2011. The Print Shop increased all the rates by 10% in fiscal year 2019, then increased the rates by an additional 5% in fiscal year 2020. In 2022, the rates were decreased by 5%. No support was provided to show that the current rates are reasonable. ? The Agency?s published markup price for special purchases, paper costs, plate material, special order supplies, and colored ink was 35%. The Agency did not have adequate documentation to support the reasonableness of the markup percentage rate. Receipts from sales of print shop services during the fiscal year ended June 30, 2022, totaled $2,835,540. Accounting Division Per the Agency?s calculation, as of June 30, 2021, the Accounting Services Internal Service Fund Balance for allowable costs was $4.528 million; however, the allowable reserve was only $1.007 million, a difference of $3.521 million, more than triple the allowable reserve. The Agency has not completed its calculation for June 30, 2022. The Auditor of Public Accounts (APA) estimate of the fund balance, per review of the accounting system, as of June 30, 2022, was $4.388 million, and the APA estimate of the allowable reserve was $1.007 million, a difference of $3.381 million. Therefore, the Agency appears to be charging too much for services. Cause: Inadequate procedures. Effect: When security costs are not allocated to all buildings in an equitable manner, Federal programs will not be charged in accordance with Federal cost principles. Additionally, without adequate controls and procedures to ensure rates are equitable and based on actual costs, there is an increased risk that Federal programs will be overcharged for services, and the Agency?s internal service funds will exceed the allowable threshold per Federal regulations. Recommendation: We recommend the Agency review its allocation of security costs to ensure that such costs are allocated in an equitable manner to all activities that benefit from the services. Additionally, we recommend the Agency maintain adequate documentation to support charges and ensure rates are equitable and reflect the actual costs incurred for services. Lastly, we recommend the Agency implement procedures to ensure fund balances do not exceed the allowable threshold. Management Response: The Building and Grounds security allocation is based on a management business decision. The Print Shop lacked the data needed to substantiate current rates at the individual service line level. In response to the prior year finding, the Print Shop purchased a Cost Rate Advisor license to support future rate setting methodology at the individual service line level. The Print Shop expects to finalize its analysis by July 2023. State Accounting Rates were reduced by $450,000 in fiscal year 2021, and from that level reduced another $132,000 in fiscal year?s 2022 and 2023 (current biennium). Further offsets of $700,000 are planned for each year of the coming biennium, and planned expenditures will exceed billed revenues by $1.7 million to bring the cash balance to within a 60-day operating level by June 2025.
Program: Various, including AL 93.767 ? Children's Health Insurance Program, AL 93.778 ? Medical Assistance Program ? Reporting Grant Number & Year: Various, including #2105NE5021, FFY 2021; #2105NE5ADM, FFY 2021 Federal Grantor Agency: Various, including U.S. Department of Health and Human Services Criteria: A good internal control plan requires adequate procedures to ensure the Schedule of Expenditures of Federal Awards (SEFA) is properly presented. Title 45 CFR ? 75.510(b) (October 1, 2021) and Title 2 CFR ? 200.510(b) (January 1, 2022) state, in part, the following: The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended . . . . At a minimum, the schedule must: * * * * (3) Provide total Federal awards expended for each individual Federal program . . . (4) Include the total amount provided to subrecipients from each Federal program. Neb. Rev. Stat. ? 81-1111(1) (Reissue 2014) states, in part, the following: Subject to the supervision of the Director of Administrative Services, the Accounting Administrator shall have the authority to prescribe the system of accounts and accounting to be maintained by the state and its departments and agencies, develop necessary accounting policies and procedures, coordinate and approve all proposed financial systems, and manage all accounting matters of the state's central system. EnterpriseOne (E1) is the official accounting system of the State. Condition: Several programs did not have expenditures or the amount provided to subrecipients accurately reported on the SEFA. We notified Administrative Services of the errors, and the SEFA was subsequently adjusted. A similar finding was noted in the prior audit. Repeat Finding: 2021-025 Questioned Costs: None Statistical Sample: No Context: Administrative Services is responsible for managing the accounting matters of the State and certifies the data collection form for the Statewide Single Audit. Administrative Services compiles the SEFA from information obtained from the individual agencies, which is then submitted to the APA. During our review, we noted the following: The Department of Health and Human Services (DHHS) did not accurately report expenditures for several programs, including underreporting AL 93.767 by $16,394,237 and overreporting AL 93.778 by $13,908,580. The Department of Military underreported AL 97.036 by $41,491,068. The Department of Labor overreported AL 17.225 by $5,286,008. Several agencies did not properly identify COVID-19 expenditures. Twenty-seven programs for various State agencies needed correction. The total expenditures and amounts provided to subrecipients originally reported and per the final SEFA were as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: Administrative Services lacked adequate procedures for ensuring the accuracy of amounts not obtained directly from the accounting system. Administrative Services established a specific account code for aid to subrecipients, but not all agencies utilized this code. Effect: Increased risk for the SEFA to be inaccurate, which could lead to Federal sanctions or programs not being audited that should be. Recommendation: We recommend Administrative Services improve procedures to ensure the SEFA is complete and accurate. Management Response: We will continue to work with State teammates to ensure the SEFA is accurate and complete. The original total SEFA expenditures were 99.3% accurate.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability Grant Number & Year: #2105NE5MAP, FFY 2021; #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.302(a) (October 1, 2021), each state must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State?s own funds. Per 45 CFR ? 75.403 (October 1, 2021), costs must be necessary, reasonable, and adequately documented. Title 471 NAC 15-003.02(1) (effective June 2, 2004, through June 5, 2022) states that personal assistance services not documented in the service plan are non-allowable services. Title 471 NAC 15-006 (effective June 2, 2004, through June 5, 2022) requires that the provider bill only for services provided and authorized, perform the personal assistance services noted on the service plan, and accurately document services provided on Form MC-37 ?Service Provider Timesheet.? Title 471 NAC 15-006.06C (effective June 2, 2004, through June 5, 2022) requires that, after receiving a provider?s timesheet and billing document, the beneficiary?s social service worker or designee must verify that ?the hours worked and services provided fall within the parameters of those authorized? by the service needs assessment. Title 471 NAC 15-003.02(H) (effective June 6, 2022) requires that the provider perform the personal assistance services noted on the service plan, accurately document services provided in the Electronic Visit Verification (EVV) system, and confirm that services were received as authorized according to Agency procedures. The Provider?s Guide for Billing PAS Recap states, ?Gather participant?s signature at each visit in EVV APP.? A good internal control plan requires procedures to ensure services provided agree to the service needs assessment. Section 1903(l)(5)(A) of the Social Security Act states the following: The term ?electronic visit verification system? means, with respect to personal care services or home health care services, a system under which visits conducted as part of such services are electronically verified with respect to ? (i) the type of service performed; (ii) the individual receiving the service; (iii) the date of the service; (iv) the location of service delivery; (v) the individual providing the service; and (vi) the time the service begins and ends. Condition: During testing of personal assistance service (PAS) claims, we noted the following: ? Services provided lacked adequate supporting documentation. This included, among other related shortcomings identified, a lack of information from the EVV specifying the activities or tasks performed by the provider. ? Services billed exceeded the number of hours authorized under the service needs assessments. ? Providers billed for unreasonable amounts of time ? including, among other things, for more daily hours than are in a 24-hour period and for unfeasible scenarios, such as the supposed performance of a week?s worth of duties for one client in a single day. One provider received compensation, including overtime pay, for six months during which no client services appear to have been performed. ? Providers received overtime pay for unauthorized services, meaning that they were compensated at an increased rate for services ineligible for payment in the first place. ? Client guardians or parents were paid for providing services, which violates governing regulations prohibiting such arrangements. ? Providers received incorrect pay rates for services rendered, resulting in significant overpayments. A similar finding has been noted in prior audits since 2014. Repeat Finding: 2021-048 Questioned Costs: $51,331 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The Agency offers personal assistance services (assistance with hygiene, mobility, housekeeping, etc.) to Medicaid recipients with disabilities and chronic conditions. The services to be provided are based on individual needs and criteria that must be determined in a written service needs assessment (SNA). The Agency implemented an electronic visit verification system for PAS providers on January 3, 2021, as required by Section 12006(a) of the 21st Century CURES Act, passed by Congress in 2016. The EVV system electronically captured and verified provider visit information, and providers were required to submit claims to the Agency electronically through this application. We selected five provider payments for testing, and from there, one week of services submitted through the EVV system. A week of service billed by the provider may include multiple claims and clients. The Agency was unable to provide documentation from the EVV system of client signatures and the specific activities or tasks performed by the provider. Claim detail provided included the start and stop times and location of the visit, but there was no record of what tasks were provided on each day and for how long to ensure compliance with the SNA. Therefore, we questioned the entire claims initially selected for testing, resulting in questioned costs of $4,011. It should be noted these deficiencies were identified in the prior audit, and no enhancements have been made to the EVV system to address these issues. We also identified other issues with the billings submitted by each provider. Therefore, we reviewed additional claims submitted by the providers. We reviewed the claim information in NFOCUS that identified the total number of quarterly units billed each day. We noted the following issues with the five providers tested: Provider 1 The provider was authorized for up to 226 quarterly units or 56.5 hours of service per week. The provider billed and was paid for 25 hours of service on July 30, 2021, and for 24.5 hours of service on September 28, 2021. It is impossible for a provider to provide more than 24 hours of service in one day. The provider also billed for hours that exceeded the SNA limit for the claim tested and for an additional four weeks reviewed during the fiscal year. Below is a summary of the weeks that exceeded the SNA. See Schedule of Findings and Questioned Costs for chart/table. In addition to the services billed that exceeded the SNA, we also noted the provider was the client?s guardian and parent. Per CFR 42 ? 440.167, personal care services cannot be provided by a member of the individual?s family. A family member is defined as a legally responsible relative. The provider is a legally responsible relative of the client as the guardian and is not allowed to get paid for these services. The Nebraska Medicaid State Plan also states that services are provided by those who are not legally responsible relatives. Title 471 NAC 15-006.01A(3), effective through June 5, 2022, also stated that a legally responsible relative cannot provide services for the client. Therefore, all payments made during fiscal year 2022 are questioned. Along with the initial claim tested, the provider was paid an additional $20,944 that is not allowable. Provider #2 The provider was authorized 160 quarterly units or 40 hours of service per week. For the claim tested, the provider exceeded the SNA by 180 quarterly units or 45 hours. This included 24 hours of care billed on both October 20, 2021, and October 22, 2021. These hours were questioned above due to inadequate documentation. The provider exceeded the weekly authorized hours for 11 weeks reviewed and billed between 2 to 33.25 hours over the SNA each week, resulting in additional questioned costs of $980. We also noted that the provider worked full time at a public school during the school year; therefore, it is likely hours billed for PAS on weekdays overlap with time worked at the school. This provider was also noted as billing over the authorized limit during last year?s audit, and no overpayments were established and the overbilling has continued. Provider #3 The Agency authorized this provider to provide 486 quarterly units or 121.5 hours of service per week for four different clients. It is not reasonable to authorize this many hours of service for one provider, as it would take over 17 hours every day of the week in order to perform all the tasks noted on the SNA. For the week tested, the provider billed 476 quarterly units or 119 hours for the week. Each SNA of these clients included some services to be performed every day of the week. For one client, the provider billed a week of services on one day. As an example, 20 minutes for a bath or shower was authorized seven times for the week or once a day. It is not reasonable that seven baths or showers were provided on one day. For this same client, assistance with meal preparation was authorized three times per day for seven days. It is not reasonable that assistance with meal preparation was provided 21 times on one day. These claims were questioned above for inadequate documentation. We reviewed an additional two weeks of services, and the provider billed for tasks authorized for seven days per week but did not provide services each of the seven days a week for all clients. For example, if a client was authorized for a bath seven times for the week, but the provider performed services on only two days, we considered the hours charged for five baths to be overbilled. This resulted in additional questioned costs of $372. It should be noted that only these two weeks were reviewed, so there may be additional questioned costs for other weeks based on the frequency of tasks authorized. See Schedule of Findings and Questioned Costs for chart/table. The provider was also paid overtime hours for these two weeks. In addition to being overpaid due to billing for tasks that were not provided as authorized, the provider received overtime pay for this overbilling, resulting in an additional $183 in questioned costs. Providers are paid at time and one-half for services in excess of 40 hours each week. Per the Agency, there is a claims overtime team that reviews the service authorizations to ensure they are not exceeded. For the two weeks reviewed alone, the provider was paid for 78.45 and 63.27 hours of overtime. Provider 4 The provider was authorized 84 quarterly units or 21 hours for one client and 146 quarterly hours units or 36.50 hours per week for another. For the claims tested, the EVV claim detail supported the number of hours billed; however, six hours of service for one client was shown to be provided by another provider, and an additional two hours was shown as provided at the provider?s address. The claim was questioned above for inadequate documentation. We also noted that the incorrect rate was paid to the provider during all of fiscal year 2022, resulting in $22,800 additional questioned costs for fiscal year 2022. The agreement between the Agency and the provider could not be located in NFOCUS, and it was requested from the Agency on June 22, 2022, and was provided on June 29, 2022. Per a narrative in NFOCUS, the agreement was missing and was found in a file on a Resource Development worker?s laptop. The agreement was completed but not signed by the provider, so it was emailed to the provider, and the signed copy was returned on June 28, 2022. Per the agreement, the rate was $2.45 per quarterly unit or $9.80 per hour. This rate agrees to the quarterly hour rate for basic personal assistance care as of July 1, 2021, per Title 471 NAC 000-515. The rate for specialized personal assistance was $2.74 per quarterly hour as of July 1, 2021; however, no evidence was provided that the provider qualified for this rate. The provider?s agreement began on August 2, 2021. The following rates were paid: See Schedule of Findings and Questioned Costs for chart/table. Provider 5 This provider was authorized 584 quarterly units or 146 hours of service per week for four different clients. This is unreasonable as it would take over 20 hours every day of the week to perform all of the tasks noted on the SNA for all clients. The EVV claim detail supported the number of hours billed; however, the verification method noted ?NON? for each entry with manual edits. A provider who is manually entering visits in the provider portal through a computer can deny tracking of the location. Although the hours billed did not exceed the SNAs for the week tested, the provider billed 101.25 hours for the week with care up to 18 and 20 hours of service per day. This provider was tested during the prior-year audit with overlapping of services and billing over the SNA. We reviewed additional claims paid during the fiscal year. The provider overbilled 3.25 hours one week for a client with questioned costs of $22. The provider also billed over the SNA for a second client for 17 weeks from July 2021 through November 2021. This client was authorized to receive 79 quarterly units or 19.75 hours of service each week. The provider billed between 10.25 to 22.25 hours over the authorized hours, resulting in questioned costs of $2,019. We did not review the specific activities noted on the SNA and did not obtain actual time of services; therefore, there could be additional questioned costs for activities not performed according to the SNA. On November 5, 2021, during the PAS renewal, this second client told the Agency that the provider had not been in the client?s apartment in over a year. The service authorization for the client was open with the provider through December 4, 2021. Services were billed from June 2021 through November 22, 2021. Based on the client?s phone call with the Agency, the provider did not provide care from June 2021 through November 2021, so all those payments may be questionable. The provider was also paid overtime for most weeks that the provider overbilled for the two clients. As stated earlier, the overtime team reviews the claims paid and the service authorizations. It is evident the Agency was aware the provider was billing over the authorized hours for the two clients, because it only allowed overtime for hours provided or up to the maximum authorized hours, whichever was less, to be included in the weekly total. No overpayments were established for billing over the authorization for the two clients. Again, there could be additional questioned costs for overtime hours if the provider did not provide care for the second client from June 2021 through November 2021. Federal payment errors noted totaled $51,331. The Federal payments tested totaled $85,074, and the total Federal share of PAS payments for the fiscal year was $5,935,883. The total State share of PAS payments for the fiscal year was $3,462,220 for a total of $9,398,103. Due to the EVV system deficiencies, we consider all dollars to be at risk. Cause: Procedures were not adequate to prevent and/or detect errors. Effect: An inadequate review of PAS claims increases the risk of services provided not being in accordance with the recipient?s needs, as well as a risk of services being billed but not provided. There is a significant risk for fraud or abuse occurring and not being detected. State and Federal funds appear to have been misspent. Recommendation: We recommend the Agency implement procedures to ensure payments are allowable, adequately supported, and in accordance with State and Federal regulations. Management Response: The Agency agrees with the finding.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability and Eligibility Grant Number & Year: #2105NE5MAP, FFY21; #2205NE5MAP, FFY22 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR ? 75.302(a) (October 1, 2021), ?Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds.? 45 CFR ? 75.403(g) (October 1, 2021) requires costs to be adequately documented. Per 477 NAC 23-003.01: The total equity value of available non-excluded resources of the client . . . is determined and compared with the established maximum for available resources the client may own and still be considered eligible. If the total equity value of available non-excluded resources exceeds the established maximum, the client is ineligible. Per 477 NAC 23-003.05(A)(iii): A specified maximum may be disregarded if it is set aside for the purpose of paying burial expenses. Further, 477 NAC 23-003.05(A)(iii)(1)(b) states that for burial policies, ?If the client has irrevocably assigned more than the specified maximum in burial insurance, the excess is not an available resource but may be a deprivation of resources.? According to NAC Medicaid Eligibility Appendix 477-000-012, the maximum for a burial trust was $5,654, effective September 1, 2021. Per 477 NAC 23-003.10, the established maximum for available resources which a client may own and still be eligible is $4,000 for a one-member unit. Per 477 NAC 23-003.05(B)(v)(1)(a): The disregard of any motor vehicle is not allowed when it has been determined a client residing in a nursing home or an assisted living facility and receiving services through Home and Community Based Services or Programs or All-Inclusive Care for the Elderly does not intend, or will not be able to return home if medical transportation is included in the payment to the facility[.] Per 477 NAC 23-003.07(B)(ii)(1), ?Ownership of a motor vehicle is verified by the title. The number of individuals on the title legally determines the percentage of ownership.? 477 NAC 23-003.04(A) defines a ?deprivation of resources? as follows: Any action taken by the applicant or client, or any other person or entity, which reduces or eliminates the applicant?s, client?s, or spouse?s recorded ownership or control of the asset for less than fair market value is a deprivation of resources. The fair market value of a resource at the time the resource was disposed of must be verified and the equity value of the resource must be determined by taking into consideration any encumbrances against the resource. . . . 42 CFR ? 435.916(b) (October 1, 2021) requires the Agency to make a redetermination of eligibility in accordance with provisions of paragraph (a)(2) of that section, which states, ?The agency must make a redetermination of eligibility without requiring information from the individual if able to do so based on reliable information contained in the individual?s account or other more current information available to the agency, including but not limited to information accessed through any data bases accessed by the agency . . . .? A good internal control plan requires procedures to ensure that income and resources are updated for changes timely, adequately documented, and verified. Condition: The Agency did not adequately verify the income and resources of individuals residing in long-term care facilities to ensure that limits were not exceeded, and the individuals were eligible. A similar finding was noted in the prior audit. Repeat Finding: 2021-049 Questioned Costs: $5,368 known (#2205NE5MAP $4,848; COVID-19 #2205NE5MAP $520) Statistical Sample: No Context: We tested 25 long-term care facility payments and noted the following issues: ? One recipient?s budget from January 2020 through August 2022 was reduced by $65 for a dental insurance premium. However, the dental insurance policy was cancelled effective December 1, 2019, and no premiums were paid by the recipient. This resulted in an overpayment of $65, with a Federal share of $42 for the claim tested. ? For one recipient, the budget for February 2022 included the 2020 social security income amount of $873 rather than the 2022 social security income amount of $937, a variance of $64. This resulted in Federal share questioned costs of $41 for the claim tested. The budgets beginning October 2022 used the correct amount for calendar year 2022. ? For one recipient, the February 2022 budget was not updated with the 2022 social security income and pension amounts, resulting in an overpayment of $185, with a Federal share of $118. The Agency was unable to complete the Medicaid renewal process because requested verifications were not provided. Due to the COVID-19 Public Health Emergency, the case was not closed, and the renewal was extended for six months, and the prior income and resource amounts from 2021 were left in the budget. However, the social security income can be verified through the income and eligibility verification system (IEVS), and the budget could be updated with the correct income, causing an increase to the share of cost but not affecting overall eligibility. ? The April 2022 budget for one recipient included the incorrect amounts for the checking and savings bank accounts, resulting in the recipient being over the $4,000 resource limit by $3,228. The entire claim is questioned, resulting in Federal share sample questioned costs of $4,049. ? The budget for one recipient included two burial trusts for a total of $10,696. The Agency failed to obtain a copy of the burial contract to determine if there were countable assets related to this trust. Instead, the entire trust amounts were included in the recipient?s budget as a non-countable resource. Additionally, the resident trust account was not included as a resource. It is unknown if the recipient would have been under the $4,000 resource limit without this documentation; therefore, the claim is questioned, resulting in Federal share sample questioned costs of $1,074. ? Two providers billed the same day for one recipient. The recipient resided in an assisted living facility and was discharged on September 23, 2021, to a nursing facility. Both facilities were paid for services on September 24, 2021, resulting in non-sample Federal share questioned costs of $44. ? One recipient had title to eight vehicles that were not currently registered; however, none of these vehicles were included as resources. If the vehicles were still in the recipient?s possession, the value should have been included as an available resource, which may have affected Medicaid eligibility. The Agency failed to conduct an independent search for vehicles and consider their value as a potential resource if they were still in the recipient?s possession. Federal payment errors noted in the sample were $5,324. The total Federal sample tested was $103,839, and the total Federal long-term care facility expenditures during the fiscal year were $263,831,164. Based on the sample tested, the case error rate was 28% (7/25). The dollar error rate was 5.13% ($5,324/$263,831,164), which projects the potential dollars at risk for fiscal year 2022 to be $13,534,539 (dollar error rate multiplied by population). Cause: Worker error and inadequate review Effect: If income and resources are not adequately verified, there is an increased risk recipients will be inappropriately determined eligible for Medicaid or determined eligible with an incorrect share of cost. Recommendation: We recommend the Agency implement procedures to ensure all resources are identified, verified, and adequately documented. Management Response: The Agency partially agrees with the finding. The agency disagrees with several findings as the APA noted, the agency could not complete renewals on several of the cases due to not having received all of the required information. However, the APAs findings indicate they believe the agency should have run budgets with only partial information (e.g. social security income) included. Outside of the public health emergency, the agency would have closed these cases. However, due to the public health emergency, the cases must remain open and per policy guidance, the renewal date should be extended rather than completing a renewal with incomplete information. The agency agrees with the findings regarding the lack of verification on file or worker error in entering information into the system. APA Response: Six of the seven exceptions noted were due to worker error. For the recipient noted in the third bullet, the social security income should have been updated using IEVS, and the pension income could have been verified by calling Veterans? Affairs.
Program: AL 93.778 ? Medical Assistance Program ? Special Tests and Provisions Grant Number & Year: All open, including #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Title 42 CFR ? 447.253(b)(1)(i) (October 1, 2021) provides the following: The Medicaid agency pays for inpatient hospital services and long-term care facility services through the use of rates that are reasonable and adequate to meet the costs that must be incurred by efficiently and economically operated providers to provide services in conformity with applicable State and Federal laws, regulations, and quality and safety standards. According to 42 CFR ? 447.253(g) (October 1, 2021), ?The Medicaid agency must provide for periodic audits of the financial and statistical records of participating providers.? The Nebraska Medicaid State Plan, Attachment 4.19-D, 12-011.11 (Audits), says the following: The Department will perform at least one initial desk audit and may perform subsequent desk audits and/or a periodic field audit of each cost report. Selection of subsequent desk audits and field audits will be made as determined necessary by the Department to maintain the integrity of the Nebraska Medical Assistance Program. The Department may retain an outside independent public accounting firm, licensed to do business in Nebraska or the state where the financial records are maintained, to perform the audits. Audit reports must be completed on all field audits and desk audits. AICPA Professional Standards AU-C Section 500, regarding audit evidence, states that audit evidence obtained directly by the auditor is more reliable than audit evidence obtained indirectly or by inference, and using electronic information may require the auditor to perform additional audit procedures to establish reliability. A good internal control plan requires field audits on long-term care facilities considered high risk to be completed as soon as possible to ensure issues are resolved timely and to reduce the risk for errors or abuse to occur. A good internal control plan also requires desk audits to include a testing sample of actual expenses. Condition: We noted that the Agency did not perform field audits on any long-term care facilities during fiscal year ended June 30, 2022. We also noted that procedures for desk audits did not obtain adequate evidence to ensure costs reported were accurate and proper. A similar finding was noted in prior audits. Repeat Finding: 2021-050 Questioned Costs: Unknown Statistical Sample: No Context: Agency procedures require a desk audit on each annual cost report provided by long-term care facilities that receive Medicaid funding, and a field audit on facilities identified by the Agency as high risk. We noted the following: ? We reviewed 20 desk audits and noted that limited procedures were performed. Costs were traced to the facilities? trial balance, but no underlying supporting documentation was obtained for significant costs, such as salaries, food, or supplies. In many of the desk audits, large increases in costs were attributed to the COVID-19 health emergency, without gaining any additional support to verify the higher costs. ? No field audits were completed during the fiscal year. Two facilities identified in fiscal year 2017 should have had field audits prior to the end of the fiscal year, but no field audits were performed. The Agency?s contractor identified 22 other facilities as high-risk between the fiscal year 2018 and fiscal year 2021 cost reports. Per the contractor, field audit work is to start in September 2022. The total Federal share of nursing facility expenditures during fiscal year 2022 was over $260 million. Cause: The contractor had not been engaged to complete the fiscal year 2017 field audits and will not start on the other field audits until September 2022. Effect: When facilities do not have proper desk audits and timely field audits, there is an increased risk for submitted cost reports to contain errors or fraud. Also, without adequate procedures, there is an increased risk for the misuse of Federal funds and noncompliance with Federal regulations. Recommendation: We recommend the Agency devote adequate resources to field audits of long-term care facilities and ensure desk audits provide reasonable assurance that cost reports are accurate. Management Response: The Agency partially agrees with the finding. DHHS believes that the work done by Myers & Stauffer for the Desk Reviews is sufficient in determining accuracy and accountability of costs for providers. DHHS acknowledges that field audits should be performed but the delay in signing the Myers & Stauffer contract led to the delay in Field audits as the Desk Reviews for 2021 and 2022 were deemed to be a priority over the Field Audit work. APA Response: As noted above, no underlying supporting documentation was obtained for significant costs reported, and no support was obtained to verify the large increases in costs.
Program: AL 93.778 ? Medical Assistance Program; AL 93.767 ? Children?s Health Insurance Program (CHIP) ? Special Tests and Provisions Grant Number & Year: All open, including #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per Title 42 CFR ? 455.104(b)(4) (October 1, 2021), the State Medicaid Agency must require the disclosing entity to provide the following disclosures: The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). Per 42 ? CFR 455.101 (October 1, 2021): Managing employee means a general manager, business manager, administrator, director, or other individual who exercises operational or managerial control over, or who directly or indirectly conducts the day-to-day operation of an institution, organization, or agency. Per the Medicaid Provider Enrollment Compendium (MPEC) (3/22/21), Section 1.4.1C: There are not exceptions to the managing employee disclosure requirement. To the extent any individual meets the definition of ?managing employee? under ?455.101, their information is required to be disclosed. Section 1.4.1C of the MPEC also contains the following: d. Non-Profit Entities Non-profit entities generally do not have owners unless state law permits such ownership. However, if a non-profit entity has managing employees, to the extent these individuals meet the definition of ?managing employee? under ? 455.101; they would have to be disclosed as such. In addition, as discussed further below, entities, including non-profit entities, that are organized as corporations must provide disclosures regarding their officers and directors. e. Government-Owned Entities There is not an exception for government-owned entities. Government-owned entities likewise need to disclose anyone meeting the definition of ?managing employee,? and would only need to disclose board members if the entity was organized as a corporation or if that individual meets the definition of ?managing employee.? See 1.4.C.1.d ?Managing Employee Disclosure.? Per 42 CFR ? 455.436 (October 1, 2021), the State Medicaid Agency must do the following: (a) Confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. (b) Check the Social Security Administration?s Death Master File, the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. (c)(1) Consult appropriate databases to confirm identity upon enrollment and reenrollment; and (2) Check the LEIE and EPLS no less frequently than monthly. 45 CFR ? 75.303 (October 1, 2021) requires the Agency to ?[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? 45 CFR ? 75.511(b) (October 1, 2021) states, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that all required disclosures are provided. Condition: Three of 25 providers tested did not include disclosure requirements for managing employees. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-051 Questioned Costs: Unknown Statistical Sample: No Context: We tested screening and enrollment for 25 Medicaid/CHIP providers. We noted that three providers, a public school, a non-profit corporation, and a for-profit corporation, failed to disclose any managing employee. Therefore, no screenings for managing employees were performed for these three providers. Cause: The Agency relies on each provider?s disclosure to be complete, true, and accurate. The provider is allowed to complete the enrollment process even if an owner or managing employee is not disclosed. Effect: Without adequate procedures to ensure providers are screened, and disclosures are complete, there is an increased risk of provider ineligibility, which could result in unallowable costs or potential harm to patients. Recommendation: We recommend the Agency obtain disclosures and screen providers as required by Federal regulations. Management Response: The Agency partially agrees with the finding. The federal regulations and MPEC require that the SMA obtain the disclosure of managing employees, that providers disclose the information, and that the SMA screen the information that is disclosed. The federal law and MPEC do not mandate that a provider must have at least one managing employee. When enrolling and revalidating their agreements, providers are directed to disclose owners and managing employees. If they fail to enter managing employee information and attempt to submit their agreement, they are directed to verify their entry and correct before submitting. It is up to the provider to determine if they have managing employees and disclose them. If the Department learns that a provider has managing employees that have not been disclosed, the provider will be directed to update their provider agreement or face sanctions. APA Response: It is not sufficient for the Agency to rely on the provider?s disclosures. Obvious errors and omissions should be reviewed to ensure compliance with Federal regulations.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability Grant Number & Year: #2105NE5MAP, FFY 2021; #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303(a) (October 1, 2021) requires the Agency to ?[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Title 45 CFR ? 75.403(g) (October 1, 2021) requires costs to be adequately documented. The ? 1915(c) Home and Community-Based Services Waiver, effective October 1, 2020, through September 30, 2021, states, in part, the following: Individual programs must be specific and measurable and updated when not yielding progress, and data must be tracked and analyzed for trends. Monthly summary reports on progress or lack of progress must be made available upon request. Good internal control requires procedures to ensure that costs are in accordance with State and Federal requirements. Condition: We tested 25 claims paid from the Comprehensive Developmental Disability (CDD) Waiver and noted that two payments tested did not have adequate documentation. A similar finding was noted in the prior audit. Repeat Finding: 2021-052 Questioned Costs: $124 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For two claims tested, we noted that monthly reporting of specific and measurable data used to analyze a recipient?s progress within the program was not on file or available upon request. Without such support we could not verify that proper services were provided. Federal payment errors for the sample tested were $124. The total Federal sample tested was $20,603, and the total of CDD payments for the fiscal year was $193,111,484. The dollar error rate for the sample was 0.60% ($124/$20,603), which estimates potential dollars at risk for fiscal year 2022 to be $1,158,669 (dollar error rate multiplied by population). Cause: Procedures were not adequate to ensure that monthly progress reports were properly completed and on file. Effect: Increased risk for unallowable charges and noncompliance with regulations. Recommendation: We recommend the Agency implement procedures to ensure that adequate documentation, including monthly progress reports, is maintained to support CDD payments. Management Response: The Agency agrees with the finding.
Program: AL 93.778 Medical Assistance Program ? Special Tests and Provisions Grant Number & Year: #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 42 CFR ? 438.3(m) (October 1, 2021), ?The contract must require MCOs [managed care organizations], PIHPs [prepaid inpatient health plans], and PAHPs [prepaid ambulatory health plans] to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles and generally accepted auditing standards.? 42 CFR ? 438.602(e) states, ?The State must periodically, but no less frequently than once every 3 years, conduct, or contract for the conduct of, an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO, PIHP or PAHP.? 42 CFR ? 438.602(g) directs this audit to be posted on the State?s website. A good internal control plan requires policies and procedures to ensure that mandatory financial audits are completed timely and in accordance with Federal regulations. Condition: The Agency does not have adequate policies and procedures to ensure that required managed care financial audits are completed timely and in accordance with Federal regulations. The MCO and PAHP audited financial reports for the year ended December 31, 2021, were not conducted in accordance with generally accepted accounting principles (GAAP). The required periodic audit of the MCOs and PAHP have not been conducted and posted on the Agency?s website. A similar finding was noted in the prior audit. Repeat Finding: 2021-053 Questioned Costs: Unknown Statistical Sample: No Context: Nebraska Total Care, Inc., Community Care Health Plan of Nebraska, Inc., United Healthcare of the Midlands, Inc., and MCNA Insurance Company had audits performed in accordance with generally accepted auditing standards; however, the financial statements were not in accordance with GAAP. The financial statements for the MCOs were prepared using ?accounting practices prescribed or permitted by the Nebraska Department of Insurance, which is a basis of accounting other than U.S. generally accepted accounting principles.? The PAHP audit was prepared using ?accounting practices prescribed or permitted by the Texas Department of Insurance . . . .? The Department of Insurance has adopted the Statement of Statutory Accounting Principles (SSAP) found in the National Association of Insurance Commissioners? (NAIC) manual. The required periodic independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by or on behalf of each MCO, PIHP, or PAHP has not been conducted. The Agency executed a contract with Myers & Stauffer LLC on November 22, 2021, to conduct the required financial audit reports for the MCOs and PAHP. Per the Medicaid Deputy Director, the audits will be completed and posted to the Agency?s website during state fiscal year 2023. Cause: The MCO and PAHP audited financial reports are completed for the Nebraska Department of Insurance, which does not require the audit to be conducted in accordance with GAAP. The contract to conduct the financial audits of the MCO and PAHP was awarded to the outside vendor in November 2021, and the vendor is in the process of completing the audits. Effect: When the financial audits completed by the MCOs and PAHP are not conducted according to GAAP, and the independent audit of the MCOs and PAHP is not completed, the Agency is not in compliance with Federal regulations, and there is an increased risk for fraud or errors. Recommendation: We recommend the Agency require the MCO and PAHP financial audits to be conducted in accordance with GAAP. We further recommend the Agency ensure the required audit of the accuracy, truthfulness, and completeness of the encounter and financial data of the MCOs and PAHP is completed timely and posted on the Agency?s website. Management Response: The Agency agrees with the finding.
Program: AL 93.778 ? Medical Assistance Program ? Special Tests and Provisions Grant Number & Year: All open, including #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Title 42 CFR ? 455.1 (October 1, 2021) sets forth requirements for a State fraud detection and investigation program, including a method to verify whether services reimbursed by Medicaid were actually furnished to beneficiaries. The Agency?s Program Integrity and Special Investigations Units (SIU) perform these functions. Per 42 CFR ? 455.14 (October 1, 2021): If the agency receives a complaint of Medicaid fraud or abuse from any source or identifies any questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. 42 CFR ? 440.170(a)(4)(i) (October 1, 2021) states, in part, the following: Non-emergency medical transportation services may be provided under contract with individuals or entities that meet the following requirements: * * * * (B) Has oversight procedures to monitor beneficiary access and complaints and ensure that transportation is timely and that transport personnel are licensed, qualified, competent, and courteous. Title 471 NAC 2-005.01 (eff. 9/21/2020) states, in part, the following: The Department may, in its discretion, deny enrollment or sanction a provider for any of the following reasons: * * * * (37) The provider is the respondent of a protection order; * * * * (39) The provider, or household member(s) (if services are provided in the provider?s home), committed a crime: (i) Against a child or vulnerable adult; (ii) Of a nature, duration, or pattern that calls into question his or her regard for the law; (iii) Involving the illegal use, possession, or distribution of a controlled substance; or (iv) That, if repeated, could injure or harm the Medicaid program or a Medicaid client. Title 471 NAC 27-008.03 (eff.7/12/2021) provides the following: Provider staff must ensure criminal history checks are completed for each potential driver prior to providing services and annually thereafter. Any person whose result includes the driver being the respondent of a protection order, crimes against a child or vulnerable adult, drug-related crimes, or crimes that if repeated could harm a Medicaid client, must not be enrolled or allowed to provide transportation to Nebraska Medicaid clients. Program Integrity?s Policies and Procedures state the following: Providers with convictions and charges pending in the following areas should be referred into the State Queue: * * * * 3. Child Neglect, physical abuse, or sexual abuse * * * * 6. Driving Under the Influence; two of any combination of DUI charges pending or convictions (5 Years) * * * * 13. Currently the respondent of a protection order Other pending charges and convictions should be considered and weighted to similar offenses included in this list. Generally speaking, this includes charges and/or convictions which, if repeated, could injure or harm the Medicaid program or a Medicaid client. Good internal control requires procedures to ensure cases are reviewed, and appropriate dispositions are made in a timely manner. Condition: For 3 of the 20 Program Integrity cases tested, there was a lack of documentation to support that a proper review had been completed. Repeat Finding: No Questioned Costs: Unknown Statistical Sample: No Context: Program Integrity is tasked with, among other things, investigating cases of potential Provider fraud in the Medicaid Program. If an investigation leads to valid findings, Program Integrity may refer the case to the Attorney General?s office, or it may sanction a provider, request a refund, provide education, and/or terminate the provider from the Medicaid Program. We tested 20 of 478 Program Integrity cases open or closed during the fiscal year and noted the following: ? One case, which was opened prior to January 2020 (no documentation was available to determine when the case was first opened), had no new information added to the case after January 9, 2020, and was closed on December 7, 2021, citing: ?Investigation failed to substantiate the allegation of not rendering services as billed.? The Agency?s department supervisor was unable to determine what was found during the investigation to warrant the case?s closure. ? One case, opened in February 2020, was to review a large increase in billings for a provider. The investigator was initially working with the managed care organization (MCO), WellCare, to verify why the billings increased. Ten months later, on December 22, 2020, the investigator?s case notes discussed referring the case and working with another MCO, Nebraska Total Care, for recouping costs. There were no clear notes in between the initial actions and the notes added later to indicate what was discovered during the investigation and how the investigator went from working exclusively with one MCO to another. The Agency could not clarify what happened during the case, and the Agency agreed that the case was ?missing lots of things.? The case was closed November 2, 2021, giving Nebraska Total Care permission to proceed with provider education and collection of overpayments of identified claims. ? For one case, opened in April 2021, documentation was not on file to support that the investigation was properly completed. The case opened because the owner of a transportation provider (i.e., taxicab) had pending child abuse charges, which is grounds for termination. Additionally, there appeared to be possible overbillings. The Agency determined that the owner was listed incorrectly on the State?s provider database; however, the Agency noted that the actual owner had two DUI charges and a charge for Possession of a Destructive Device. Based on the Agency?s guidelines, these alone could be grounds for sanctions or termination, especially if he was a driver. The Agency contacted the actual owner and requested a list of drivers and their screenings. Later, the Agency also requested support for the paid claims and informed the owner that he needed to update his information in the provider database. The program never received the support to determine if the owner was a driver or to verify that the provider was not overbilling on claims. The case was closed on December 6, 2021, before confirmation was obtained that the provider database had been updated. We also noted that, during the time the investigation was open, the owner was respondent to a harassment protection order and found guilty of charges on three separate cases: driving during revocation; violation of the protection order; and false reporting. Had the Agency performed a criminal background check before closing the case, these convictions would have been discovered and would have been further grounds for sanctions or termination, per Title 471 NAC 2-005.01. We also found that the owner had more recent charges, after the case was closed, including possession of a controlled substance and first-degree sexual assault (both of which were bound over to District court for probable cause) and driving during revocation (second offense), and was also current respondent to a harassment protection order. When the Auditor of Public Accounts (APA) inquired with the Agency about this case, the Agency indicated that the case would be reopened to ensure the provider database was updated with the correct owner listed. Cause: The Agency did not follow proper procedures, including supervisor reviews of cases, to ensure that Program Integrity cases were worked in a proper and timely fashion. Effect: When potential fraud cases are not pursued adequately and timely, there is an increased risk for misuse of funds and potential harm to individuals receiving services. Recommendation: We recommend the Agency implement procedures to ensure Program Integrity cases are reviewed properly and timely, and appropriate dispositions are made. Management Response: The Agency agrees with the finding.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability Grant Number & Year: #2105NE5MAP, FFY 2021; #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.302(a) (October 1, 2021), each state must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State?s own funds. Per 45 CFR ? 75.403 (October 1, 2021), costs must be necessary, reasonable, and adequately documented. Title 471 NAC 15-003.02(1) (effective June 2, 2004, through June 5, 2022) states that personal assistance services not documented in the service plan are non-allowable services. Title 471 NAC 15-006 (effective June 2, 2004, through June 5, 2022) requires that the provider bill only for services provided and authorized, perform the personal assistance services noted on the service plan, and accurately document services provided on Form MC-37 ?Service Provider Timesheet.? Title 471 NAC 15-006.06C (effective June 2, 2004, through June 5, 2022) requires that, after receiving a provider?s timesheet and billing document, the beneficiary?s social service worker or designee must verify that ?the hours worked and services provided fall within the parameters of those authorized? by the service needs assessment. Title 471 NAC 15-003.02(H) (effective June 6, 2022) requires that the provider perform the personal assistance services noted on the service plan, accurately document services provided in the Electronic Visit Verification (EVV) system, and confirm that services were received as authorized according to Agency procedures. The Provider?s Guide for Billing PAS Recap states, ?Gather participant?s signature at each visit in EVV APP.? A good internal control plan requires procedures to ensure services provided agree to the service needs assessment. Section 1903(l)(5)(A) of the Social Security Act states the following: The term ?electronic visit verification system? means, with respect to personal care services or home health care services, a system under which visits conducted as part of such services are electronically verified with respect to ? (i) the type of service performed; (ii) the individual receiving the service; (iii) the date of the service; (iv) the location of service delivery; (v) the individual providing the service; and (vi) the time the service begins and ends. Condition: During testing of personal assistance service (PAS) claims, we noted the following: ? Services provided lacked adequate supporting documentation. This included, among other related shortcomings identified, a lack of information from the EVV specifying the activities or tasks performed by the provider. ? Services billed exceeded the number of hours authorized under the service needs assessments. ? Providers billed for unreasonable amounts of time ? including, among other things, for more daily hours than are in a 24-hour period and for unfeasible scenarios, such as the supposed performance of a week?s worth of duties for one client in a single day. One provider received compensation, including overtime pay, for six months during which no client services appear to have been performed. ? Providers received overtime pay for unauthorized services, meaning that they were compensated at an increased rate for services ineligible for payment in the first place. ? Client guardians or parents were paid for providing services, which violates governing regulations prohibiting such arrangements. ? Providers received incorrect pay rates for services rendered, resulting in significant overpayments. A similar finding has been noted in prior audits since 2014. Repeat Finding: 2021-048 Questioned Costs: $51,331 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The Agency offers personal assistance services (assistance with hygiene, mobility, housekeeping, etc.) to Medicaid recipients with disabilities and chronic conditions. The services to be provided are based on individual needs and criteria that must be determined in a written service needs assessment (SNA). The Agency implemented an electronic visit verification system for PAS providers on January 3, 2021, as required by Section 12006(a) of the 21st Century CURES Act, passed by Congress in 2016. The EVV system electronically captured and verified provider visit information, and providers were required to submit claims to the Agency electronically through this application. We selected five provider payments for testing, and from there, one week of services submitted through the EVV system. A week of service billed by the provider may include multiple claims and clients. The Agency was unable to provide documentation from the EVV system of client signatures and the specific activities or tasks performed by the provider. Claim detail provided included the start and stop times and location of the visit, but there was no record of what tasks were provided on each day and for how long to ensure compliance with the SNA. Therefore, we questioned the entire claims initially selected for testing, resulting in questioned costs of $4,011. It should be noted these deficiencies were identified in the prior audit, and no enhancements have been made to the EVV system to address these issues. We also identified other issues with the billings submitted by each provider. Therefore, we reviewed additional claims submitted by the providers. We reviewed the claim information in NFOCUS that identified the total number of quarterly units billed each day. We noted the following issues with the five providers tested: Provider 1 The provider was authorized for up to 226 quarterly units or 56.5 hours of service per week. The provider billed and was paid for 25 hours of service on July 30, 2021, and for 24.5 hours of service on September 28, 2021. It is impossible for a provider to provide more than 24 hours of service in one day. The provider also billed for hours that exceeded the SNA limit for the claim tested and for an additional four weeks reviewed during the fiscal year. Below is a summary of the weeks that exceeded the SNA. See Schedule of Findings and Questioned Costs for chart/table. In addition to the services billed that exceeded the SNA, we also noted the provider was the client?s guardian and parent. Per CFR 42 ? 440.167, personal care services cannot be provided by a member of the individual?s family. A family member is defined as a legally responsible relative. The provider is a legally responsible relative of the client as the guardian and is not allowed to get paid for these services. The Nebraska Medicaid State Plan also states that services are provided by those who are not legally responsible relatives. Title 471 NAC 15-006.01A(3), effective through June 5, 2022, also stated that a legally responsible relative cannot provide services for the client. Therefore, all payments made during fiscal year 2022 are questioned. Along with the initial claim tested, the provider was paid an additional $20,944 that is not allowable. Provider #2 The provider was authorized 160 quarterly units or 40 hours of service per week. For the claim tested, the provider exceeded the SNA by 180 quarterly units or 45 hours. This included 24 hours of care billed on both October 20, 2021, and October 22, 2021. These hours were questioned above due to inadequate documentation. The provider exceeded the weekly authorized hours for 11 weeks reviewed and billed between 2 to 33.25 hours over the SNA each week, resulting in additional questioned costs of $980. We also noted that the provider worked full time at a public school during the school year; therefore, it is likely hours billed for PAS on weekdays overlap with time worked at the school. This provider was also noted as billing over the authorized limit during last year?s audit, and no overpayments were established and the overbilling has continued. Provider #3 The Agency authorized this provider to provide 486 quarterly units or 121.5 hours of service per week for four different clients. It is not reasonable to authorize this many hours of service for one provider, as it would take over 17 hours every day of the week in order to perform all the tasks noted on the SNA. For the week tested, the provider billed 476 quarterly units or 119 hours for the week. Each SNA of these clients included some services to be performed every day of the week. For one client, the provider billed a week of services on one day. As an example, 20 minutes for a bath or shower was authorized seven times for the week or once a day. It is not reasonable that seven baths or showers were provided on one day. For this same client, assistance with meal preparation was authorized three times per day for seven days. It is not reasonable that assistance with meal preparation was provided 21 times on one day. These claims were questioned above for inadequate documentation. We reviewed an additional two weeks of services, and the provider billed for tasks authorized for seven days per week but did not provide services each of the seven days a week for all clients. For example, if a client was authorized for a bath seven times for the week, but the provider performed services on only two days, we considered the hours charged for five baths to be overbilled. This resulted in additional questioned costs of $372. It should be noted that only these two weeks were reviewed, so there may be additional questioned costs for other weeks based on the frequency of tasks authorized. See Schedule of Findings and Questioned Costs for chart/table. The provider was also paid overtime hours for these two weeks. In addition to being overpaid due to billing for tasks that were not provided as authorized, the provider received overtime pay for this overbilling, resulting in an additional $183 in questioned costs. Providers are paid at time and one-half for services in excess of 40 hours each week. Per the Agency, there is a claims overtime team that reviews the service authorizations to ensure they are not exceeded. For the two weeks reviewed alone, the provider was paid for 78.45 and 63.27 hours of overtime. Provider 4 The provider was authorized 84 quarterly units or 21 hours for one client and 146 quarterly hours units or 36.50 hours per week for another. For the claims tested, the EVV claim detail supported the number of hours billed; however, six hours of service for one client was shown to be provided by another provider, and an additional two hours was shown as provided at the provider?s address. The claim was questioned above for inadequate documentation. We also noted that the incorrect rate was paid to the provider during all of fiscal year 2022, resulting in $22,800 additional questioned costs for fiscal year 2022. The agreement between the Agency and the provider could not be located in NFOCUS, and it was requested from the Agency on June 22, 2022, and was provided on June 29, 2022. Per a narrative in NFOCUS, the agreement was missing and was found in a file on a Resource Development worker?s laptop. The agreement was completed but not signed by the provider, so it was emailed to the provider, and the signed copy was returned on June 28, 2022. Per the agreement, the rate was $2.45 per quarterly unit or $9.80 per hour. This rate agrees to the quarterly hour rate for basic personal assistance care as of July 1, 2021, per Title 471 NAC 000-515. The rate for specialized personal assistance was $2.74 per quarterly hour as of July 1, 2021; however, no evidence was provided that the provider qualified for this rate. The provider?s agreement began on August 2, 2021. The following rates were paid: See Schedule of Findings and Questioned Costs for chart/table. Provider 5 This provider was authorized 584 quarterly units or 146 hours of service per week for four different clients. This is unreasonable as it would take over 20 hours every day of the week to perform all of the tasks noted on the SNA for all clients. The EVV claim detail supported the number of hours billed; however, the verification method noted ?NON? for each entry with manual edits. A provider who is manually entering visits in the provider portal through a computer can deny tracking of the location. Although the hours billed did not exceed the SNAs for the week tested, the provider billed 101.25 hours for the week with care up to 18 and 20 hours of service per day. This provider was tested during the prior-year audit with overlapping of services and billing over the SNA. We reviewed additional claims paid during the fiscal year. The provider overbilled 3.25 hours one week for a client with questioned costs of $22. The provider also billed over the SNA for a second client for 17 weeks from July 2021 through November 2021. This client was authorized to receive 79 quarterly units or 19.75 hours of service each week. The provider billed between 10.25 to 22.25 hours over the authorized hours, resulting in questioned costs of $2,019. We did not review the specific activities noted on the SNA and did not obtain actual time of services; therefore, there could be additional questioned costs for activities not performed according to the SNA. On November 5, 2021, during the PAS renewal, this second client told the Agency that the provider had not been in the client?s apartment in over a year. The service authorization for the client was open with the provider through December 4, 2021. Services were billed from June 2021 through November 22, 2021. Based on the client?s phone call with the Agency, the provider did not provide care from June 2021 through November 2021, so all those payments may be questionable. The provider was also paid overtime for most weeks that the provider overbilled for the two clients. As stated earlier, the overtime team reviews the claims paid and the service authorizations. It is evident the Agency was aware the provider was billing over the authorized hours for the two clients, because it only allowed overtime for hours provided or up to the maximum authorized hours, whichever was less, to be included in the weekly total. No overpayments were established for billing over the authorization for the two clients. Again, there could be additional questioned costs for overtime hours if the provider did not provide care for the second client from June 2021 through November 2021. Federal payment errors noted totaled $51,331. The Federal payments tested totaled $85,074, and the total Federal share of PAS payments for the fiscal year was $5,935,883. The total State share of PAS payments for the fiscal year was $3,462,220 for a total of $9,398,103. Due to the EVV system deficiencies, we consider all dollars to be at risk. Cause: Procedures were not adequate to prevent and/or detect errors. Effect: An inadequate review of PAS claims increases the risk of services provided not being in accordance with the recipient?s needs, as well as a risk of services being billed but not provided. There is a significant risk for fraud or abuse occurring and not being detected. State and Federal funds appear to have been misspent. Recommendation: We recommend the Agency implement procedures to ensure payments are allowable, adequately supported, and in accordance with State and Federal regulations. Management Response: The Agency agrees with the finding.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability and Eligibility Grant Number & Year: #2105NE5MAP, FFY21; #2205NE5MAP, FFY22 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR ? 75.302(a) (October 1, 2021), ?Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds.? 45 CFR ? 75.403(g) (October 1, 2021) requires costs to be adequately documented. Per 477 NAC 23-003.01: The total equity value of available non-excluded resources of the client . . . is determined and compared with the established maximum for available resources the client may own and still be considered eligible. If the total equity value of available non-excluded resources exceeds the established maximum, the client is ineligible. Per 477 NAC 23-003.05(A)(iii): A specified maximum may be disregarded if it is set aside for the purpose of paying burial expenses. Further, 477 NAC 23-003.05(A)(iii)(1)(b) states that for burial policies, ?If the client has irrevocably assigned more than the specified maximum in burial insurance, the excess is not an available resource but may be a deprivation of resources.? According to NAC Medicaid Eligibility Appendix 477-000-012, the maximum for a burial trust was $5,654, effective September 1, 2021. Per 477 NAC 23-003.10, the established maximum for available resources which a client may own and still be eligible is $4,000 for a one-member unit. Per 477 NAC 23-003.05(B)(v)(1)(a): The disregard of any motor vehicle is not allowed when it has been determined a client residing in a nursing home or an assisted living facility and receiving services through Home and Community Based Services or Programs or All-Inclusive Care for the Elderly does not intend, or will not be able to return home if medical transportation is included in the payment to the facility[.] Per 477 NAC 23-003.07(B)(ii)(1), ?Ownership of a motor vehicle is verified by the title. The number of individuals on the title legally determines the percentage of ownership.? 477 NAC 23-003.04(A) defines a ?deprivation of resources? as follows: Any action taken by the applicant or client, or any other person or entity, which reduces or eliminates the applicant?s, client?s, or spouse?s recorded ownership or control of the asset for less than fair market value is a deprivation of resources. The fair market value of a resource at the time the resource was disposed of must be verified and the equity value of the resource must be determined by taking into consideration any encumbrances against the resource. . . . 42 CFR ? 435.916(b) (October 1, 2021) requires the Agency to make a redetermination of eligibility in accordance with provisions of paragraph (a)(2) of that section, which states, ?The agency must make a redetermination of eligibility without requiring information from the individual if able to do so based on reliable information contained in the individual?s account or other more current information available to the agency, including but not limited to information accessed through any data bases accessed by the agency . . . .? A good internal control plan requires procedures to ensure that income and resources are updated for changes timely, adequately documented, and verified. Condition: The Agency did not adequately verify the income and resources of individuals residing in long-term care facilities to ensure that limits were not exceeded, and the individuals were eligible. A similar finding was noted in the prior audit. Repeat Finding: 2021-049 Questioned Costs: $5,368 known (#2205NE5MAP $4,848; COVID-19 #2205NE5MAP $520) Statistical Sample: No Context: We tested 25 long-term care facility payments and noted the following issues: ? One recipient?s budget from January 2020 through August 2022 was reduced by $65 for a dental insurance premium. However, the dental insurance policy was cancelled effective December 1, 2019, and no premiums were paid by the recipient. This resulted in an overpayment of $65, with a Federal share of $42 for the claim tested. ? For one recipient, the budget for February 2022 included the 2020 social security income amount of $873 rather than the 2022 social security income amount of $937, a variance of $64. This resulted in Federal share questioned costs of $41 for the claim tested. The budgets beginning October 2022 used the correct amount for calendar year 2022. ? For one recipient, the February 2022 budget was not updated with the 2022 social security income and pension amounts, resulting in an overpayment of $185, with a Federal share of $118. The Agency was unable to complete the Medicaid renewal process because requested verifications were not provided. Due to the COVID-19 Public Health Emergency, the case was not closed, and the renewal was extended for six months, and the prior income and resource amounts from 2021 were left in the budget. However, the social security income can be verified through the income and eligibility verification system (IEVS), and the budget could be updated with the correct income, causing an increase to the share of cost but not affecting overall eligibility. ? The April 2022 budget for one recipient included the incorrect amounts for the checking and savings bank accounts, resulting in the recipient being over the $4,000 resource limit by $3,228. The entire claim is questioned, resulting in Federal share sample questioned costs of $4,049. ? The budget for one recipient included two burial trusts for a total of $10,696. The Agency failed to obtain a copy of the burial contract to determine if there were countable assets related to this trust. Instead, the entire trust amounts were included in the recipient?s budget as a non-countable resource. Additionally, the resident trust account was not included as a resource. It is unknown if the recipient would have been under the $4,000 resource limit without this documentation; therefore, the claim is questioned, resulting in Federal share sample questioned costs of $1,074. ? Two providers billed the same day for one recipient. The recipient resided in an assisted living facility and was discharged on September 23, 2021, to a nursing facility. Both facilities were paid for services on September 24, 2021, resulting in non-sample Federal share questioned costs of $44. ? One recipient had title to eight vehicles that were not currently registered; however, none of these vehicles were included as resources. If the vehicles were still in the recipient?s possession, the value should have been included as an available resource, which may have affected Medicaid eligibility. The Agency failed to conduct an independent search for vehicles and consider their value as a potential resource if they were still in the recipient?s possession. Federal payment errors noted in the sample were $5,324. The total Federal sample tested was $103,839, and the total Federal long-term care facility expenditures during the fiscal year were $263,831,164. Based on the sample tested, the case error rate was 28% (7/25). The dollar error rate was 5.13% ($5,324/$263,831,164), which projects the potential dollars at risk for fiscal year 2022 to be $13,534,539 (dollar error rate multiplied by population). Cause: Worker error and inadequate review Effect: If income and resources are not adequately verified, there is an increased risk recipients will be inappropriately determined eligible for Medicaid or determined eligible with an incorrect share of cost. Recommendation: We recommend the Agency implement procedures to ensure all resources are identified, verified, and adequately documented. Management Response: The Agency partially agrees with the finding. The agency disagrees with several findings as the APA noted, the agency could not complete renewals on several of the cases due to not having received all of the required information. However, the APAs findings indicate they believe the agency should have run budgets with only partial information (e.g. social security income) included. Outside of the public health emergency, the agency would have closed these cases. However, due to the public health emergency, the cases must remain open and per policy guidance, the renewal date should be extended rather than completing a renewal with incomplete information. The agency agrees with the findings regarding the lack of verification on file or worker error in entering information into the system. APA Response: Six of the seven exceptions noted were due to worker error. For the recipient noted in the third bullet, the social security income should have been updated using IEVS, and the pension income could have been verified by calling Veterans? Affairs.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability Grant Number & Year: #2105NE5MAP, FFY 2021; #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303(a) (October 1, 2021) requires the Agency to ?[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Title 45 CFR ? 75.403(g) (October 1, 2021) requires costs to be adequately documented. The ? 1915(c) Home and Community-Based Services Waiver, effective October 1, 2020, through September 30, 2021, states, in part, the following: Individual programs must be specific and measurable and updated when not yielding progress, and data must be tracked and analyzed for trends. Monthly summary reports on progress or lack of progress must be made available upon request. Good internal control requires procedures to ensure that costs are in accordance with State and Federal requirements. Condition: We tested 25 claims paid from the Comprehensive Developmental Disability (CDD) Waiver and noted that two payments tested did not have adequate documentation. A similar finding was noted in the prior audit. Repeat Finding: 2021-052 Questioned Costs: $124 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For two claims tested, we noted that monthly reporting of specific and measurable data used to analyze a recipient?s progress within the program was not on file or available upon request. Without such support we could not verify that proper services were provided. Federal payment errors for the sample tested were $124. The total Federal sample tested was $20,603, and the total of CDD payments for the fiscal year was $193,111,484. The dollar error rate for the sample was 0.60% ($124/$20,603), which estimates potential dollars at risk for fiscal year 2022 to be $1,158,669 (dollar error rate multiplied by population). Cause: Procedures were not adequate to ensure that monthly progress reports were properly completed and on file. Effect: Increased risk for unallowable charges and noncompliance with regulations. Recommendation: We recommend the Agency implement procedures to ensure that adequate documentation, including monthly progress reports, is maintained to support CDD payments. Management Response: The Agency agrees with the finding.
Program: AL 17.225 ? COVID-19 ? Unemployment Insurance ? Federal; AL 17.225 ? Unemployment Insurance ? State ? Allowability & Eligibility Grant Number & Year: FFY 2021 and FFY 2022 Federal Grantor Agency: U.S. Department of Labor Repeat Finding: 2021-054 Questioned Costs: $73,746 known (17.225 ? COVID19 ? UI ? FPUC Federal, $1,500; 17.225 ? COVID19 ? UI ? PUA Federal; $3,216; 17.225 ? UI ? State, $69,030) Statistical Sample: No Summary: Audit Finding 2022-013 included in Part II of this report, relates to both the financial statements and Federal awards. The APA performed a random sample of benefit payments and tested payments to State employees, inmates, individuals with high wages, and other payments. Our procedures revealed adjudication issues, improper payments to claimants, and other issues. The APA randomly selected 40 claimant benefit payments. The total sample tested was $19,579, and questioned costs for payments tested were $6,545. Total benefit payments for the fiscal year ended June 30, 2022, were $69,734,975. Based on the sample tested, the dollar error rate for the sample was 33.43% ($6,545/$19,579), which estimates the potential dollars at risk for fiscal year 2022 to be $23,312,402 (dollar error rate multiplied by population). We noted additional questioned costs during testing, totaling $67,201. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Recommendation: We recommend the Agency implement procedures to prevent the payment of improper unemployment compensation benefits. Those same procedures should also ensure compliance with State and Federal requirements, ensuring the following: 1) procedures are improved for identifying incarcerated individuals and identifying and assessing whether State employees are eligible for UI benefits; 2) employer responses to requests for separation information are adjudicated properly and followed up on; 3) investigations are created properly and completed in a timely manner; 4) benefit overpayments are established and recouped in a timely manner; and 5) verification of claimants? identity and employment or self-employment is performed properly and in a timely manner. Management Response: NDOL has multiple procedures in place to prevent and detect overpayments and conducts all crossmatches required by USDOL, including but not limited to the State and National Directories of New Hires and the Social Security Administration SSN, death and prisoner data bases. NDOL is meeting or exceeds federal requirements. The NCJIS prisoner crossmatch exceeds federal requirements. NCJIS records are supposed to contain all incarceration and release records for state and county correctional facilities. The one inmate in question was not listed as incarcerated in the SSA prisoner crossmatch and was reflected as released from incarceration in NCJIS records. The eligibility determination was based upon that NCJIS record. The state employee crossmatch is not federally required but is conducted as a best practice. NDOL will review the current state employee crossmatch process to determine if it is running as intended and whether adjustments to the process need to occur. Adjudicators are trained to review employer responses for separation in accordance with ETA Handbook 401, Edition 5. Adjudicator errors occur, but it is the result of human error rather than a systemic design flaw.
Program: AL 17.225 ? COVID-19 ? Unemployment Insurance ? Federal; AL 17.225 ? Unemployment Insurance ? State ? Allowability & Eligibility Grant Number & Year: FFY 2021 and FFY 2022 Federal Grantor Agency: U.S. Department of Labor Repeat Finding: 2021-054 Questioned Costs: $73,746 known (17.225 ? COVID19 ? UI ? FPUC Federal, $1,500; 17.225 ? COVID19 ? UI ? PUA Federal; $3,216; 17.225 ? UI ? State, $69,030) Statistical Sample: No Summary: Audit Finding 2022-013 included in Part II of this report, relates to both the financial statements and Federal awards. The APA performed a random sample of benefit payments and tested payments to State employees, inmates, individuals with high wages, and other payments. Our procedures revealed adjudication issues, improper payments to claimants, and other issues. The APA randomly selected 40 claimant benefit payments. The total sample tested was $19,579, and questioned costs for payments tested were $6,545. Total benefit payments for the fiscal year ended June 30, 2022, were $69,734,975. Based on the sample tested, the dollar error rate for the sample was 33.43% ($6,545/$19,579), which estimates the potential dollars at risk for fiscal year 2022 to be $23,312,402 (dollar error rate multiplied by population). We noted additional questioned costs during testing, totaling $67,201. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Recommendation: We recommend the Agency implement procedures to prevent the payment of improper unemployment compensation benefits. Those same procedures should also ensure compliance with State and Federal requirements, ensuring the following: 1) procedures are improved for identifying incarcerated individuals and identifying and assessing whether State employees are eligible for UI benefits; 2) employer responses to requests for separation information are adjudicated properly and followed up on; 3) investigations are created properly and completed in a timely manner; 4) benefit overpayments are established and recouped in a timely manner; and 5) verification of claimants? identity and employment or self-employment is performed properly and in a timely manner. Management Response: NDOL has multiple procedures in place to prevent and detect overpayments and conducts all crossmatches required by USDOL, including but not limited to the State and National Directories of New Hires and the Social Security Administration SSN, death and prisoner data bases. NDOL is meeting or exceeds federal requirements. The NCJIS prisoner crossmatch exceeds federal requirements. NCJIS records are supposed to contain all incarceration and release records for state and county correctional facilities. The one inmate in question was not listed as incarcerated in the SSA prisoner crossmatch and was reflected as released from incarceration in NCJIS records. The eligibility determination was based upon that NCJIS record. The state employee crossmatch is not federally required but is conducted as a best practice. NDOL will review the current state employee crossmatch process to determine if it is running as intended and whether adjustments to the process need to occur. Adjudicators are trained to review employer responses for separation in accordance with ETA Handbook 401, Edition 5. Adjudicator errors occur, but it is the result of human error rather than a systemic design flaw.
Program: AL 17.225 ? Unemployment Insurance ? Admin ? Special Tests & Provisions Grant Number & Year: UI-36202-21-60-A-31 grant period 1/1/2021 to 9/30/2022; UI-37991-22-60-A-31, grant period 1/1/2022 to 9/30/2023 Federal Grantor Agency: U.S. Department of Labor Criteria: Unemployment Insurance Program Letter (UIPL) 10-22 (January 21, 2022), Section 4.d., from the U.S. Department of Labor (USDOL) states the following, in relevant part: i. Required Engagement of UI Staff ? UI staff must be engaged in the administration of the RESEA program. This includes, but is not limited to: ? Participating in the planning, administration, and oversight of the RESEA program; * * * * ? Ensuring accurate data are provided in the RESEA-required reports[.] UIPL 10-22 also goes on to state, under section 4.d.v.B., the following: Performance reporting for FY 2022 consists of the ETA 9128, Reemployment and Eligibility Assessment Workload, and ETA 9129, Reemployment and Eligibility Assessments Outcomes; Office of Management and Budget (OMB) Control No. 1205-0456, expiration date 9/30/2022. . . . A state UI staff member must review these reports for accuracy each calendar quarter and prior to submission, in addition to being reviewed by the RESEA program lead (if a different staff member). The various grant agreements to which the State agreed state the following: In performing its responsibilities under this grant agreement, the awardee hereby certifies and assures that it will fully comply with all applicable Statute(s), and the following regulations and cost principles, including any subsequent amendments: Uniform Administrative Requirements, Cost Principles, and Audit Requirements: 2 CFR Part 200; Uniform Administrative Requirements, Cost Principles, and Audit Requirements[.] Additionally, per 2 CFR ? 2900.4 (January 1, 2022), the U.S. Department of Labor adopted the OMB Uniform Guidance as its policies and procedures for financial assistance administration. Per 2 CFR ? 200.514(c)(3) (January 1, 2022), we, as the auditors, must test controls. AICPA auditing standards require that, in designing and performing tests of controls, the auditor should obtain more persuasive audit evidence the greater the reliance the auditor places on the effectiveness of a control, and inquiry alone is not sufficient to test the operating effectiveness of controls. Condition: Documentation was not maintained to verify that Unemployment Insurance (UI) staff were reviewing all the quarterly Reemployment Services and Eligibility Assessments (RESEA) performance reports prior to submission. Repeat Finding: 2021-056 Questioned Costs: None Statistical Sample: No Context: The Agency has a process for a UI staff member and a RESEA staff member to review the quarterly RESEA performance reports prior to submission. However, documentation of UI staff?s review was not maintained for the following reports: ? 9128 report quarter ending 3/31/2022 ? 9129 report quarter ending 9/30/2021 ? 9129 report quarter ending 12/31/2021 ? 9129 report quarter ending 3/31/2022 Cause: The Agency?s UI staff did not document its review for all RESEA performance reports. Effect: When documentation is not maintained to support the review of RESEA performance reports, there is an increased risk that inaccurate reports will be submitted. Additionally, there is no evidence the Agency complied with Federal requirements to review the reports prior to submission. Recommendation: We recommend the Agency implement a documented review of the RESEA performance reports by UI staff to demonstrate such review was completed prior to the submission of the reports. Management Response: The process currently being used by NDOL is that UI staff submit the RESEA report. In the USDOL Final Determination for FY 2021, USDOL stated that: In response to the Initial Determination (ID), the SON stated they have moved their report submission to a UI Program Supervisor. The grantee?s UI Program Supervisor is responsible for submitting all Federal unemployment reports. Prior to submitting the report, the program supervisor reaches out to the impacted program supervisors to verify accuracy of the report. This is done via e-mail with a deadline response time provided. Specific to this report, verification is done through the above process with both UI and Reemployment Services supervisors prior to submission. Determination: Based on the above, ETA has determined the finding is corrected. APA Response: During fieldwork, we asked the Agency multiple times for documentation that the four reports referenced herein were reviewed by UI staff prior to being submitted, but no such support was provided for any of the reports.
Program: AL 17.225 ? Unemployment Insurance ? Admin ? Special Tests & Provisions Grant Number & Year: UI-35660-21-55-A-31, FFY 2021; UI-37235-22-55-A-31, FFY 2022 Federal Grantor Agency: U.S. Department of Labor Criteria: Per 2 CFR ? 2900.4 (January 1, 2022), the U.S. Department of Labor adopted the OMB Uniform Guidance as its policies and procedures for financial assistance administration. Per 2 CFR ? 200.303(a) (January 1, 2022), the non-Federal entity must do the following: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committed of Sponsoring Organizations of the Treadway Commission (COSO). Good internal controls require procedures to ensure that amounts owed are adequately tracked. Condition: We were not able to reconcile the subsidiary employer accounts with the State?s Unemployment Insurance (UI) general ledger control accounts. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: The Agency maintains accounts, or subsidiary ledgers, on State UI taxes received or due from individual employers and the UI Benefits charged to the employer. The Agency previously used the Tax Management System (TMS) to track employer accounts up to November 2021. Starting in December 2021, the Agency switched to the Geographic Solutions Unemployment System (GUS). The compliance supplement requires the auditor to reconcile, on a test basis, the subsidiary employer accounts with the State?s UI general ledger control accounts. Per the State?s Accounting system (EnterpriseOne), the Tax Contribution, Interest, and Penalties Receivable accounts were $3,587,459, $653,964, and $174,901. Only a report of the total Tax Contribution Receivables per the GUS system was provided, and the total per this report did not agree to the total Tax Contribution Receivables per EnterpriseOne. Therefore, we were unable to determine if the receivable amount in EnterpriseOne agreed to GUS, and we were unable to reconcile those subsidiary employer accounts with the State?s UI general ledger control accounts that had interest and/or penalties due. Cause: The Agency did not create a report for the total balance owed by employer when the new UI tax system was implemented. Effect: When there are not procedures to track amounts owed, there is an increased risk that amounts owed will not be collected. Recommendation: We recommend the Agency work with its vendor for the UI tax system to implement reports to track the amounts owed by employer. Management Response: The UI tax system currently tracks the amounts owed by individual employers and issues an ETA 581 report which lists aggregated employer liability data on quarterly basis. That aggregated data can be reviewed within the UI tax system on an employer, by employer basis. The Agency recognizes a desire for the Tax System to provide a specific report that can be run at any time and provide Tax Contribution Receivables. NDOL is working with the software vendor to provide additional employer liability reporting capabilities.
Program: AL 20.205 ? Highway Planning & Construction ? Subrecipient Monitoring Grant Number & Year: Various Federal Grantor Agency: U.S. Department of Transportation Criteria: Per 2 CFR ? 1201.1 (January 1, 2022), the U.S. Department of Transportation adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at Title 2 CFR part 200. 2 CFR ? 200.332(a) (January 1, 2022) requires all pass-through entities to do the following: Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification . . . . Required information includes: (1) Federal award identification. * * * * (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; * * * * (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; * * * * (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; Good internal control requires procedure to ensure that subrecipients are informed of all required information. Condition: The Agency did not communicate all required information to subrecipients. We noted further that the Agency lacked procedures for ensuring subrecipients have sufficient accounting controls to manage Federal funds properly. Repeat Finding: No Questioned Costs: Unknown Statistical Sample: No Context: During the fiscal year, there were 46 subaward projects to a total of eight subrecipients. We tested five subawards and noted the Agency did not properly communicate the subrecipients? unique entity identifier, the Federal Award Identification Number, Federal award date, and amount of Federal funds obligated and committed for all five subrecipient projects tested. Additionally, for one of five projects tested, the Assistance Listing number and title was not communicated. Subrecipient expenditures totaled $29,277,795 during the fiscal year. Cause: The program agreement template used for subrecipient awards does not include all required Federal award identification data elements. For the one project where the Federal Assistance Listings number and title was not communicated, the program agreement was completed in 2006, prior to the program agreement template being changed to include this information. Effect: Noncompliance with Federal regulations could result in sanctions. When subrecipients are not informed of all required information, there is an increased risk for subrecipient noncompliance, including with audit requirements. Recommendation: We recommend the Agency implement procedures to ensure that subrecipient program agreements include all information required to be communicated. Management Response: NDOT concurs with finding and will review all current active agreements to ensure notification of each federal subaward is clearly identified to the subrecipient.
Program: AL 20.509 ? Formula Grants for Rural Areas ? Allowability & Subrecipient Monitoring Grant Number & Year: NE-2019-013-00, FFY 2017 Federal Grantor Agency: U.S. Department of Transportation Criteria: Per 2 CFR ? 1201.1 (January 1, 2022), the U.S. Department of Transportation adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at Title 2 CFR part 200. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. A good internal control plan requires procedures to be in place to ensure compliance with Federal and State requirements. 2 CFR ? 200.332(d) (January 1, 2022) requires the pass-through entity to do the following: 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. 2 CFR ? 200.430(i)(1) (January 1, 2022) states the following, in relevant part: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; * * * * (vii) Support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards . . . [.] Per 2 CFR ? 200.405(a) (January 1, 2022), ?A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received.? Condition: The Agency lacked adequate documentation to support that payments were for allowable activities and in accordance with Federal cost principles. A similar finding was noted in the prior audit. Repeat Finding: 2021-065 Questioned Costs: $64,704 known Statistical Sample: No Context: We tested 25 payments to 22 subrecipients and three vendors. The Agency performed financial desk reviews for subrecipients; however, the reviews tested were not adequate. When desk reviews were not adequate, we provided the Agency with the opportunity to obtain additional support from the subrecipient; however, adequate support was not obtained. We noted the following: ? For nine subrecipients tested, documentation was not adequate to support that personnel charges were allowable and in accordance with Federal cost principles. The Agency did not have timesheets, time certifications, or other payroll documentation on file for all reimbursement requests. In some cases, payroll documentation was on file, but there was not adequate support to verify that the correct amount was charged to the program, as timesheets were not sufficient to identify time allocated to the program when the employee did not work entirely on the Federal program. In addition, for some subrecipients there was not sufficient documentation to support the benefits reimbursed. ? For one subrecipient tested, fuel costs and maintenance expenses were not adequately supported. The expenses were not supported by invoices. ? For seven subrecipients tested, capital and nonoperating costs were not adequately supported. The Agency did not obtain documentation to support the percentage of nonoperating expenditures allocated to the program. Subrecipients may share building space with other city or county offices and, therefore, may be charged a portion of the rent and utilities. While this is allowable, the Agency must obtain documentation to support that the percent allocated to the transit program is reasonable; however, such supporting documentation was not available. We also noted that one subrecipient was improperly reimbursed for sales taxes. The sample population totaled $15,537,764, which included $12,810,135 paid to 60 subrecipients and $2,727,629 vendor payments. Federal payment errors noted in the sample totaled $24,600. The total Federal sample tested was $353,695. Based on the sample tested, the dollar error rate was 6.96% ($24,600/$353,695), which estimates the potential dollars at risk for fiscal year 2022 to be $1,081,428 (dollar error rate multiplied by population). North Fork Area Transit During the course of our audit, we became aware of potential fraud related to the North Fork Area Transit (NFAT), a subrecipient of the Agency. On December 15, 2022, the Director of NFAT was suspended. A warrant was issued for his arrest the next day, alleging theft of up to $1 million between April and December 2022. From April 1, 2022, through June 30, 2022, the Program reimbursed NFAT a total of $582,587. As a result, we selected the April 2022 reimbursement paid to NFAT in June 2022, totaling $101,519, for additional testing. During that testing we identified $40,104 in questioned costs due to the following: ? For all four non-operating personnel (director and managers), documentation was inadequate to support that personnel charges were allowable and in accordance with Federal cost principles, as the timesheets identified only times in and out and did not specify what work the nonoperating employee was performing for the Federal grant. Questioned costs due to the lack of support for nonoperating personnel totaled $24,104. ? A $20,000 payment for vehicle insurance was reported; however, there was no documentation to support how the amount was determined or why it was reasonable. Furthermore, the $20,000 paid was inconsistent with past vehicle insurance payments. We observed a check in March 2022 for $600 with the description that it was for March bus insurance, and previous testing identified $600 bus insurance checks in August 2020 and August 2021. As a result, we question the Federal share of $16,000. ? We also noted inconsistencies in supporting documentation for operating personnel (drivers and dispatchers). Variances were noted between timesheet hours and the payroll register. Due to the NFAT concerns, the APA has now commenced a thorough review of this entire matter, which will be reported separately at a later date. Cause: Procedures were not adequate to ensure that costs were in accordance with Federal requirements. Effect: Increased risk for errors or misuse of funds. Recommendation: We recommend the Agency strengthen subrecipient monitoring procedures. We further recommend the Agency improve procedures to ensure expenditures are allowable and in accordance with Federal regulations. Management Response: The NDOT Local Assistance Division has increased transit staff by 1.5 FTEs for a total of 3.5 FTEs dedicated to reviewing monthly invoices. NDOT continues to engage and educate transit recipients. In late 2022, the North Fork Area Transit (NFAT) Board began an internal review process which revealed an inappropriate use of funds and authorities were notified. In December 2022, the NFAT Board engaged NDOT and requested assistance from the Mobility Management Team following the allegation. The Mobility Management Team is assisting the NFAT Board in managing operations, review of existing reporting and financial policies, and review and update of step-by-step checks and balances process. NDOT is financially supporting the Mobility Management Team in an effort to support and resume services at NFAT.
Program: AL 20.933 ? National Infrastructure Investments ? Reporting Grant Number & Year: 693JJ22040000BDG3NE5009003, Period ending September 5, 2023; 693JJ22040000BDG0NE0752128, Period ending February 1, 2024 Federal Grantor Agency: U. S. Department of Transportation Criteria: Per 2 CFR ? 1201.1 (January 1, 2022), the U.S. Department of Transportation adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at Title 2 CFR part 200. 2 CFR ? 200.302(a) (January 1, 2022) states the following: Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 170 (January 1, 2022), Appendix A, Section I, Reporting Subawards and Executive Compensation, states, in relevant part, the following: (a) Reporting of first-tier subawards. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency . . . . * * * * (2) Where and when to report. (i) The non-Federal entity or Federal agency must report each obligating action described in paragraph a.1. of this award term to http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the obligation was made. Good internal control requires procedures to ensure that Federal reports are complete, accurate, and submitted as required. Condition: Both the quarterly financial reports and the Federal Funding Accountability and Transparency Act (FFATA) report were inaccurate. A similar finding was noted in the prior audit. Repeat Finding: 2021-066 Questioned Costs: N/A Statistical Sample: No Context: The Agency is required to file quarterly SF-425 Financial Reports for each open project. We noted the following: ? The Agency did not complete the cash receipts, cash disbursements, and cash on hand sections for the quarters ended September 30, 2021, and December 31, 2021, for projects 21209 and 22277. In addition, Federal funds authorized and Federal share of expenditures were not completed for project 22277 for these same two quarters. ? We noted the following errors for the 21209 quarterly report ended March 31, 2022. See Schedule of Findings and Questioned Costs for chart/table. ? The June 30, 2022, quarterly report for project 21209 reported $0 cash disbursements and $5,529,176 cash on hand. These line items should have been reversed, with $5,529,176 reported as cash disbursements. The $5,529,176 was correctly reported as the Federal share of expenditures. During the fiscal year, the Agency had one subrecipient that required FFATA reporting. One of seven Key Data Elements tested was not reported accurately. The amount of the subaward was $16,960,000; however, that amount was reported incorrectly as $16,960. Cause: Employee error and inadequate review procedures. Effect: Noncompliance with Federal requirements, which could lead to sanctions. Recommendation: We recommend the Agency improve procedures to ensure expenditures are reported properly and agree to accounting records. We further recommend the Agency improve procedures to ensure FFATA reporting is accurate. Management Response: The FY21 Statewide Single Report was issued on June 23, 2022. Upon receipt of the findings, NDOT took action to implement changes to the quarterly SF-425 Report. The Key Data Element noted as being inaccurately reported as $16,960 is a number automatically generated by the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). A federal system, not a state system. The federal funding of $16,960,000 was accurately reflected in other areas of the report. NDOT concurs with the adjustments and will review procedures to ensure accurate FFATA reporting. APA Response: It is the Agency?s responsibility to ensure that all data reported is accurate. While the grant award of $16,960,000 was identified on the report, the subaward of $16,960,000 was incorrectly reported as $16,960. If the Agency is aware that key data elements are incorrect, the Agency should make the necessary changes so the subaward amount is accurate. In response to our testing, Agency staff indicated they went back into the system and were able to adjust the numbers.
Program: AL 21.023 ? COVID-19 Emergency Rental Assistance ? Allowability & Earmarking Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200. 2 CFR ? 200.403 (January 1, 2022) states, in relevant part, the following: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. 2 CFR ? 200.404 (January 1, 2022) states the following: A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost. 2 CFR ? 200.459 (January 1, 2022) states, in relevant part, the following: (a) Costs of professional and consultant services rendered by persons who are members of a particular profession or possess a special skill, and who are not officers or employees of the non-Federal entity, are allowable, subject to paragraphs (b) and (c) of this section when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the Federal Government. . . . (b) In determining the allowability of costs in a particular case, no single factor or any special combination of factors is necessarily determinative. However, the following factors are relevant: (1) The nature and scope of the service rendered in relation to the service required. * * * * (6) Whether the service can be performed more economically by direct employment rather than contracting. (7) The qualifications of the individual or concern rendering the service and the customary fees charged, especially on non-federally funded activities. (8) Adequacy of the contractual agreement for the service (e.g., description of the service, estimate of time required, rate of compensation, and termination provisions). Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(c)(2)(A) of the Consolidated Appropriations Act, 2021, states, in relevant part: Not less than 90 percent of the funds received by an eligible grantee from a payment made under this section shall be used to provide financial assistance to eligible households . . . . Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(c)(3) of the Consolidated Appropriations Act, 2021, states, in relevant part: Not more than 10 percent of funds received by an eligible grantee from a payment made under this section may be used to provide eligible households with case management and other services related to the novel coronavirus disease (COVID-19) outbreak, as defined by the Secretary, intended to help keep households stably housed. Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(c)(5)(A) of the Consolidated Appropriations Act, 2021, states, in relevant part: Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. Per the amended Emergency Rental Assistance terms, dated March 26, 2021, ?The total of all administrative costs, whether direct or indirect costs, may not exceed 10 percent of the total amount of the total award.? The Reallocation Guidance from the U.S. Department of the Treasury (Treasury), dated March 30, 2022, states the following: A Grantee may spend up to 10% of its initial ERA1 allocation for administrative expenses only if the Grantee obligates at least 30% of its initial allocation for the provision of financial assistance and housing stability services on behalf of eligible households by September 30, 2022. If a Grantee has obligated less than 30% of its initial allocation providing financial assistance and housing stability services as of September 30, 2022, Treasury will presume that the Grantee?s administrative expenses were not attributable to such services ? and therefore were not permissible uses of ERA1 funds ? to the extent that the administrative expenses exceed 10% of the Grantee?s allocation after deducting amounts recaptured or reallocated as excess funds, unless the Grantee can demonstrate that those costs are related to the delivery of the program. Condition: The contractual agreement to receive and evaluate applications for Emergency Rental Assistance (ERA) did not have adequate limitations or provisions to ensure costs were reasonable. A similar finding was noted in the prior audit. Repeat Finding: 2021-063 Questioned Costs: $3,580,007 known Statistical Sample: No Context: The State of Nebraska was initially awarded $158,572,581 for ERA to assist eligible households that have difficulty making timely payments of rent and utilities due to the COVID-19 pandemic. At least 90% of funds are to be earmarked for financial aid to eligible households. Not more than 10% of funds may be used for administrative costs. The Agency entered into a contract with Deloitte & Touche LLP (Deloitte) to provide program administration and case management. Eligibility determinations were made by Deloitte and then sent to the State for review and to process the aid payments to eligible recipients. Deloitte was paid $8,672,561 during the fiscal year ended June 30, 2022. We tested one payment for $531,314 and noted the following: ? Adequate support was not on file to allow for a determination as to whether the contracted amount was reasonable. There were no maximums or limitations other than the $14,627,160 cap specified in the contract. The contract was paid on an hourly rate and did not have any stipulations regarding the number of hours paid per application or performance measures to be achieved. ? Per guidance from Treasury, if the State obligates less than 30% of its initial allocation providing financial aid by September 30, 2022, Treasury will presume that the State?s administrative expenses were not attributable to the program, at least to the extent that the administrative expenses exceed 10% of the Grantee?s allocation after deducting amounts recaptured or reallocated as excess funds. The State voluntarily reallocated $84,700,000 to local governments and was required to return an additional $11,716,548 for reallocation. Therefore, State administrative expenses would be limited to $6,215,603 (10% of awarded amount less reallocations). Administrative expenses in fiscal year 2021 and 2022 totaled $9,795,610. As a result, we question costs of $3,580,007 for administrative costs exceeding 10%. As of January 17, 2023, the Agency has spent $26,399,517 on financial aid, and $13,080,572 for administrative expenses, of which $12,563,227 was paid to Deloitte. This is 33.13% of the total amount paid as of January 17, 2023. Without spending 30% of its award on financial aid, the Agency will not meet the earmarking requirements per the guidance released from Treasury. Based on the amount of financial aid spent, the administrative costs appear unreasonable. Cause: The contract was not competitively bid, and contract provisions were not specific enough to ensure that amounts paid were reasonable. The Agency lacked adequate procedures to ensure adherence to earmarking requirements. Effect: Without such adequate procedures, there is an increased risk for misuse of Federal funds. The Agency did not meet earmarking requirements. Recommendation: We recommend the Agency improve its procedures for ensuring the reasonableness of contractual service payments. Management Response: The Military Department does not agree with this finding. Vendor Contract: The State performed procurement procedures soliciting Requests for Information from vendors in 2020 to support COVID-19 related tasks. A contractual agreement was completed with the vendor once the State determined the program costs, estimated level-of-effort, and key assumptions were reasonable based on the scope of services the State requested. In addition, the state complied with the procurement standards set forth in 2 CFR 200.317-200.327, including expected contract provisions, key program assumptions, and not-to-exceed thresholds. The contractual agreement was completed to enable the State to proactively monitor vendor performance and analyze detailed information on associated cost. Vendor performance was monitored through twice-weekly status meetings, bi-weekly executive status briefings with executives across multiple agencies, bi-weekly Executive Steering Committee meetings, and review of detailed invoices. The State as the Grantee is able to demonstrate that the administrative costs are related to the delivery of the program in a timely fashion and is aligned with US Treasury Guidance. APA Response: As of January 17, 2023, the Agency has spent $1 in administration costs for every $2 spent for aid. This does not appear reasonable and is not in accordance with earmarking requirements. Thus, in addition to the questioned administrative costs identified for 2022, the agency appears to be on track for incurring millions of dollars more in such questioned costs for 2023.
Program: AL 21.023 ? COVID-19 Emergency Rental Assistance ? Allowability & Eligibility Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200. 2 CFR ? 200.303 (January 1, 2022) states, in relevant part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. . . . Good internal controls require risk assessments to be performed, and procedures to verify the validity of applicants prior to payment. 2 CFR ? 200.403 (January 1, 2022) states, in part: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. * * * * (g) Be adequately documented. The Nebraska ERA Program FAQ states, ?Who is eligible? You are eligible if you answer YES to ALL of the following: . . .Your landlord is not an immediate family member.? Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(k)(3)(A) of the Consolidated Appropriations Act, 2021, states that an eligible household is a household of one or more individuals that is obligated to pay rent on a residential dwelling. Good internal controls require procedures to verify the validity of applicants prior to payment. Condition: Procedures were not adequate to ensure that payments were allowable, and individuals were eligible for assistance. A similar finding was noted in the prior audit. Repeat Finding: 2021-064 Questioned Costs: $76,050 known Statistical Sample: No Context: During testing of 40 aid payments, we noted one payment, totaling $1,350, made to an applicant whose landlord was an immediate relative. The total sample tested was $87,526, and total assistance payments for the fiscal year were $17,456,087. The dollar error rate for the sample was 1.54% ($1,350/$87,526), which estimates the potential dollars at risk for fiscal year 2022 to be $268,824 (dollar rate multiplied by the population.) In the prior and current audit, we noted that the Agency identified likely fraudulent payments. As of January 9, 2023, the Agency had identified $155,360 and $822,188 of likely fraudulent payments in fiscal years ended June 30, 2021, and June 30, 2022, respectively. We reviewed five of these payments, totaling $74,700, in fiscal year 2022. For all five payments, we noted indicators of possible fraud, as information on the application provided was inconsistent with the information from other databases or systems. Examples of such indicators include the following: 1) the owner of the property per the County Assessors website not agreeing to the owner listed on the application; 2) generic and editable supporting documentation; and 3) tenants and landlords having out-of-state identification and telephone numbers. According to the Agency, these payments have been referred to the State Patrol for further investigation. Cause: The Agency had various procedures for ensuring that application information was accurate; however, verifying the property owner to County Assessor information was not required. Effect: There is an increased risk for fraudulent payments. Once fraudulent payments have been made, the likelihood of recouping them is low. Recommendation: We recommend the Agency improve its procedures for verifying the validity of applicants prior to payments. We further recommend the Agency continue to work with law enforcement to recoup improper payments. Management Response: The Military Department does not agree with this finding. The State has implemented a strong system of internal controls to determine program eligibility. These controls include detailed pre-payment and post-payment analytics to help identify applications at risk for fraud. As the ERA program progressed in Nebraska and nationally, program procedures continued to be enhanced to monitor for and prevent potentially fraudulent applications. During its life the program provided proactive fraud detection for over 56,000 tenant and landlord applications and prevented approximately $23M of funding from being paid out erroneously. Additionally, the State turns over any paid applications that have been subsequently determined at risk of being fraudulent to the State Patrol for further investigation and potential prosecution. APA Response: In addition to the one of 40 payments tested with errors, five payments we reviewed noted possible indications of fraud. Once fraudulent payments have been made, the likelihood of recouping them is low. 2 CFR ? 200.516 (January 1, 2022) requires reporting known or likely fraud affecting a Federal award.
Program: AL 21.023 ? COVID-19 Emergency Rental Assistance ? Reporting Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost principles, and Audit Requirements set forth at 2 CFR part 200. 2 CFR ? 200.302(a) (January 1, 2022) states, in relevant part, the following: [T]he state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Per the Treasury Emergency Rental Assistance (ERA) Quarterly Reporting Special Tip, issued on January 24, 2022, ?[A]mounts returned to Treasury, whether excess funds or voluntary reallocation, should be excluded from reporting since the funds are no longer available for obligation or expenditure.? A good internal control plan requires procedures to ensure that all required data is reported and documented and does not include excluded amounts. Condition: The Agency did not correctly report Cumulative Obligations to Date and Cumulative Expenditures to Date on the ERA Compliance Report for quarter ending June 30, 2022. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: The Cumulative Obligations to Date and Cumulative Expenditures to Date reported on the ERA Compliance Report for quarter ending June 30, 2022, were $137,087,293 and $127,949,502, respectively. The amounts reported included the $96,416,548 that had been returned to the U.S. Department of the Treasury for voluntary reallocation and excess funds. However, per the guidance issued by the U.S. Department of the Treasury on January 24, 2022, the $96,416,548 should have been excluded from the report. Cause: Employee oversight. Effect: The Cumulative Obligations to Date and Cumulative Expenditures to Date on the ERA compliance report for quarter ending June 30, 2022, were overstated. Recommendation: We recommend the Agency improve procedures to ensure reports are accurate. Management Response: The Military Department agrees with this finding. The State?s ERAP award could not be used to provide assistance to individuals residing in Omaha, Lincoln, Lancaster County, or Douglas County as those political subdivisions received separate ERAP awards. With the largest need being in those metropolitan areas of the State, $84.7 million was obligated to those communities through the Treasury reallocation process. An additional $11.7 million was paid back to U.S. Treasury as part of a recapture process. Those amounts were shown as cumulative obligations against the initial award of $158.5 million until the award amount was formally adjusted down by U.S. Treasury.
Program: AL 21.026 ? COVID-19 Homeowner Assistance Fund ? Allowability & Eligibility Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200. U.S. Department of the Treasury Homeowner Assistance Fund Guidance states the following, in relevant part: HAF participants must have a reasonable basis under the circumstances for determining income for purposes of the requirements described above under ?Eligible Homeowners.? Two approaches for income verification are permissible: (1) the household may provide a written attestation as to household income together with supporting documentation?or (2) the household may provide a written attestation as to household income and the HAF participant may use a reasonable fact-specific proxy for household income, such as reliance on data regarding average incomes in the household?s geographic area. The Financial Assistance Agreement states that Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, as set out in 2 C.F.R. Part 200, are applicable to the award. Per 2 CFR ? 200.303 (January 1, 2022): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Good internal control requires procedures to ensure that participants are eligible and payments are proper. Condition: The Agency did not have adequate procedures to ensure that payments were allowable, and participants were eligible for assistance. Repeat Finding: No Questioned Costs: $981 known Statistical Sample: No Context: We tested 25 assistance payments. One $981 payment tested did not include the co-applicant. The applicant noted his marital status as married; however, the application was signed only by one individual, and the income verification review was performed only for the applicant and did not include the income of the spouse. The total sample tested was $116,341, and total assistance payments for the fiscal year were $5,015,888. Based on the sample tested, the case error rate was 4% (1/25). The dollar error rate for the sample was 0.84% ($981/$116,341), which estimates the potential dollars at risk for fiscal year 2022 to be $42,133 (dollar rate multiplied by the population.) Cause: Staff errors and inadequate review. Effect: Increased risk for errors or fraud. Recommendation: We recommend the Agency improve procedures for ensuring that applications are properly completed and reviewed, and eligibility requirements are met. Management Response: The Military Department agrees with this finding. Management agrees the spouse should have been added to the application, income verification completed for the spouse, and no letter of explanation was provided for excluding the spouse. However, adding the spouse?s name and income would not have changed the award decision.
Program: AL 21.026 ? COVID-19 Homeowner Assistance Fund ? Subrecipient Monitoring Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200. 2 CFR ? 200.332 (January 1, 2022) states the following, in relevant part: All pass through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient?s unique entity identifier (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per ? 200.414. * * * * (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. 2 CFR ? 200.333 (January 1, 2022) states the following: With prior written approval from the Federal awarding agency, a pass-through entity may provide subawards based on fixed amounts up to the Simplified Acquisition Threshold, provided that the subawards meet the requirements for fixed amount awards in ?200.201. 2 CFR ? 200.201 (January 1, 2022) states the following, in relevant part: (b) Fixed amount awards. In addition to the options described in paragraph (a) of this section, Federal awarding agencies, or pass-through entities as permitted in ? 200.333, may use fixed amount awards (see Fixed amount awards in ? 200.1) to which the following conditions apply: (1) The Federal award amount is negotiated using the cost principles (or other pricing information) as a guide. The Federal awarding agency or pass-through entity may use fixed amount awards if the project scope has measurable goals and objectives and if adequate cost, historical, or unit pricing data is available to establish a fixed amount award based on a reasonable estimate of actual cost. . . . Good internal controls require procedures for the proper maintenance of program documents. Condition: The Agency lacked adequate procedures for monitoring subrecipients. Repeat Finding: No Questioned Costs: $451,851 known Statistical Sample: No Context: On November 2, 2021, the Agency signed a Memorandum of Understanding (MOU) with the Nebraska Investment Finance Authority (NIFA) to assist the Agency in carrying out the Homeowner Assistance Fund (HAF) Program. The Agency agreed to pay NIFA an amount not to exceed $1,200,000 for services during the initial contract period of November 1, 2021, through January 31, 2023. This included: 1) a flat fee of $78,348 for delivery of an accepted HAF Plan; 2) a flat fee of $90,700 for implementation of the Program, payable the month following program launch; and 3) $69,081 per month, beginning February 2022, for ongoing project administration. During the fiscal year ended June 30, 2022, the Agency paid NIFA $451,581. We noted the following: ? The Agency did not have controls and procedures in place to ensure that subrecipient requirements were met. ? The Agency did not communicate the Federal award identification items required by 2 CFR ? 200.332. ? NIFA was to be paid fixed amounts; however, prior written approval of these fixed-amount payments, as required by 2 CFR ? 200.333, could not be provided. In addition, the Agency did not have adequate support to ensure that the amounts paid were reasonable, as required by 2 CFR ? 200.201. Furthermore, per an Employee Time Summary report, the actual cost for February through June 2022 was $152,301, compared to the $345,404 billed and paid for monthly services. Cause: Inadequate procedures. Effect: Increased risk of fraud and non-compliance with Federal guidelines. Recommendation: We recommend the Agency implement procedures to ensure that Federal guidelines are followed, and controls are in place for subrecipient monitoring. Management Response: The Military Department disagrees with this finding. The Military Department does require NIFA to comply with 2 CFR 200 and executes procedures and controls to ensure the Federal guidelines are followed. These include (but are not limited to) weekly program updates, monthly reporting of plan metrics, compliance reviews, monthly manpower evaluations of NIFA personnel against invoices to substantiate project management supporting the program and reasonableness of administration fees. In addition, the MOU with NIFA was amended to require monthly manpower evaluations to substantiate the monthly fee for project management and administration of the program beginning with July 2022 invoicing, thus changing from a flat fee to actual costs incurred. APA Response: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200; therefore, the Agency is required to follow 2 CFR part 200. Payments during fiscal year ended June 30, 2022, were made under a fixed amount subaward. Fixed amount subawards are allowable only with prior written approval from the Federal awarding agency. The failure to communicate items required by 2 CFR ? 200.332 (January 1, 2022) illustrates further the inadequacy of Agency procedures.
Program: AL 21.027 ? COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds ? Allowability Grant Number & Year: NA Federal Grantor Agency: U.S. Department of the Treasury Repeat Finding: No Questioned Costs: $12,392,009 known Statistical Sample: No Summary: Audit Finding 2022-007, included in Part II of this report, relates to both the financial statements and Federal awards. In June 2022, the Department of Corrections (NDCS) performed journal entries, moving payroll costs of $20,395,464 from the State General Fund to the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) grant. The transfer included an $8 per hour wage increase for Corrections Corporals, Sergeants, and Unit Caseworkers. The transfer also included overtime, shift differential, and on-call hours for all staff. The amount for overtime, shift differential, and on-call hours was not in accordance with Federal regulations for SLFRF, which allows only for the portion of employee?s time spent responding to COVID-19, and was not in accordance with Legislative Bill 1014 (April 13, 2022). Section 12 of LB 1014 states that the funds are ?related to premium pay for Public Health and Public Safety positions as a result of COVID-19 conditions . . . .? Unallowable costs totaled $12,392,009 ($20,395,464 less premium pay allowed of $8,003,455). Recommendation: We recommend NDCS implement procedures to ensure that Legislative Bills and Federal regulations are adhered to. Management Response: As indicated in an email to the APA dated December 2, 2022, NDCS does not agree with the APA's finding regarding overtime, shift differential and on-call hours. NDCS believes these are allowable expenses under the federal regulations for CSLFRF and the Final Rule. COVID conditions resulted in significant vacancies in NDCS' facilities. Mandatory overtime was necessary for the majority of staff, especially those who had direct contact with inmates. This included those who provided medical/mental health, food service and other services to inmates, as well as those who oversaw administrative and support roles. Daily staffing decisions/assessments were made to maintain safe and secure operations for inmates, team members and the public at all times, since these facilities require staffing 24/7/365. Further, NDCS submitted additional documentation to the APA for the $8 wage increase incurred during FY 2023. As indicated by APA, the $8 wage increase was an allowable expense. As referenced in the information sent to the APA, under State of Nebraska accounting policies and procedures, any federal funds received in a prior fiscal year carryover into the next fiscal year. We remain confident the documentation submitted by NDCS meets federal regulations. APA Response: The ?Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule,? issued by the U.S. Department of the Treasury (Department) in January 2022, states clearly, on page 26 thereof, the following: SLFRF funding may be used for payroll and covered benefits for public safety, public health, health care, human services and similar employees of a recipient government, for the portion of the employee?s time spent responding to COVID-19. (Emphasis added.) Likewise, on page 27 of that same document, the following reiteration is provided: SLFRF funding may be used for payroll and covered benefits for the portion of the employees? time spent on COVID-19 response, as calculated above, through the period of performance. (Emphasis added.) As noted in audit finding 2022-007, moreover, page 4385 of the Final Rule contains the following: At the same time, many public health and safety workers perform roles unrelated to COVID?19; coverage of all roles would be overbroad compared to the workers responding to COVID?19 in actuality. For this reason, the final rule maintains the interim final rule?s approach to permitting SLFRF funds to be used for public health and safety staff primarily dedicated to responding to COVID?19. (Emphasis added.) Despite these explicit and unambiguous directives, NDCS attempts to defend its questioned expenditure of SLFRF funds by stating, ?All public safety workers are presumed to have worked in a COVID capacity.? In addition to risking precisely the type of ?overbroad? coverage warned against, such an outlook flies in the face of the Final Rule?s requirement that a proper allocation of SLFRF funds must be based upon a periodic documented assessment showing that any employee or unit/division receiving such grant monies has been ?primarily dedicated? to responding to COVID-19. This is explained in detail on page 4384 of the Final Rule, which includes the following: Recipients are generally required to be able to support uses of SLFRF funds as eligible, including, in this instance, maintenance of records to support an assessment that public health and safety staff are primarily dedicated to responding to COVID?19. (Emphasis added.) An unsubstantiated presumption, such as that relied upon by NDCS, is insufficient to meet this plain requirement. Furthermore, we noted that overtime, shift differential, and on-call hours paid during the six-month period prior to the pandemic were almost indistinguishable from those paid during the pandemic; this indicates that the staffing issues faced by NDCS were not caused primarily by COVID-19. The APA did not test documentation related to FY2023 that was received subsequent to our testing of the FY2022 transactions. State policies do allow for carryover of General Fund appropriations with certain restrictions; however, State policies do not allow for the charging of expenditures prior to the date of the obligation. FY2023 wages were not an allowable FY2022 expenditure per State or Federal policies.
Program: Various, including AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.558 ? Temporary Assistance for Needy Families; AL 93.566 ? Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 ? Child Care and Development Block Grant ? Allowable Costs/Cost Principles Grant Number & Year: Various, including 202121S251443, FFY 2021; 202222S251443, FFY 2022; 1901NETANF, FFY 2019; 2101NERCMA, FFY 2021; 2201NERCMA, FFY 2022; 2201NECCDD, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303 (October 1, 2021) states, in relevant part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be necessary, reasonable, and adequately documented. 45 CFR ? 75.302 (October 1, 2021) requires financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 400.1 (January 1, 2022), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. 2 CFR ? 200.303 (January 1, 2022) states, in part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. 45 CFR ? 75.511(b) and 2 CFR ? 200.511(b) (January 1, 2022) state, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that amounts charged to Federal programs are proper. Condition: The Agency did not properly charge Federal programs for seven allocations tested. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-031, 2021-032 Questioned Costs: $44,356 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For seven of 14 allocations tested, we noted the following: ? We tested the allocation of cost center 25C21940 Field Office Resource Development for the quarter ended September 30, 2021, which is allocated based on Time & Effort reports. The payroll costs for 85 employees were charged to the cost center; however, four of the employees? payroll costs should not have been charged to the cost center. The four employees tested included a Federal Aid Administrator, a Program Accuracy Specialist, and two Office Specialists. The supervisors they worked with were not charged to this cost center, and the employees were not employed as Resource Developers, which was the job title of most of the employees included in this cost center. As a result of these employees being charged to the Resource Development cost center instead of their appropriate cost centers, Child Care and Development, Foster Care, Adoption Assistance, Guardianship Assistance, and Medicaid were not charged correctly, ranging from undercharges of $2,653 to overcharges of $2,402. Additionally, we were unable to determine how the payroll costs of $9,858 to the Federal Aid Administrator should have been allocated. The Resource Development cost center allocated $1,444,162 for the quarter ended September 30, 2021. A similar finding was noted in the prior audit. ? We tested the allocation of cost center 25C20680 Legal Services General Legal Teams for the quarter ended June 30, 2022, which is allocated based on Time & Effort reports. The payroll costs for a Legislative Coordinator were recorded to this cost center during the quarter. However, these costs should have been recorded to cost center 25C20720 Communications and Legislative Services Administration. As a result, this employee?s payroll costs of $15,777 during the quarter were not allocated to Federal programs correctly. We were unable to determine how these payroll costs should have been allocated. The Legal Services General Legal Teams cost center allocated $1,332,052 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21960 Field Office Social Services Casework for quarter ended September 30, 2021, which is allocated based on random moment time studies (RMTS) results. The Bridges to Independence program and Guardianship Assistance program should have been allocated $1,464 each from this cost center; however, the Agency did not include these programs in the allocation. As a result, the Federal grants for Refugee and Entrant Assistance, Child Care and Development, Foster Care, Adoption Assistance, Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Medicaid were overcharged, ranging from $3 to $982, and the Guardianship Assistance grant was undercharged $732. The Field Office Social Services Casework cost center allocated $8,099,617 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C21920 Field Office Child Protection & Safety Services for the quarter ended June 30, 2022, which is allocated based on RMTS results. The Agency began using a new RMTS system in January 2022; however, the Agency did not set up the quarterly summary reports correctly. Below are the issues noted: o RMTS observations for Trial Home Visits were not included in the allocation. As a result, State programs were undercharged, and Federal programs were overcharged. o The RMTS observations for Child Protection Initial Assessment were not properly allocated. As a result, Foster Care was overcharged, and Adoption and Guardianship were undercharged. o The RMTS observations for Before or After Work Hours were incorrectly included in the State?s allocation. As a result, Federal programs were undercharged. In total, Federal grants for Adoption Assistance, Foster Care, and Guardianship Assistance were undercharged $28,560, $113,762, and $1,990, respectively. The Field Office Child Protection & Safety Services cost center allocated $12,429,881 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21910 Field Office Administration for the quarter ended June 30, 2022, which is allocated based on labor hours. The Agency did not include all of the applicable labor hours for the Medicaid program. As a result, the Federal grants for Adoption Assistance, Foster Care, Guardianship Assistance, Refugee and Entrant Assistance, Child Care and Development, TANF, and SNAP were overcharged, ranging from $265 to $30,556, and the Medicaid grant was undercharged $235,906. The Field Office Administration cost center allocated $3,236,547 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C20990 IST Application NFOCUS Applications for the quarter ended September 30, 2021, which is allocated based on client counts per NFOCUS/MMIS reports. We noted that the Foster Care and TANF recipient counts used in the allocation did not agree to support. The Foster Care count included 71 clients that were paid with State funds, resulting in $265 being overcharged to the Foster Care grant, and the TANF count included 48 clients that were paid with State funds, resulting in $358 being overcharged to the TANF grant. Additionally, we were unable to trace the member counts to documentation that supported allocating $1,853,284 to Medicaid and $283,190 to the Children?s Health Insurance Program (CHIP). The Agency did not maintain the member count reports used at the time of the allocation. The Agency was able to generate a historical report; however, while the report amounts were similar, they did not agree with the counts used in the allocation. The Agency did maintain system summary reports at the time of the allocation, and the total counts on the summary reports did agree to amounts used for the allocation. However, as the summary reports used did not maintain the detail of members counted, we could not verify the accuracy of the reports used. The IST Application Services NFOCUS Applications cost center allocated $3,800,340 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C23823 iServe IAPD H971 ? Shared for the quarter ending June 30, 2022. The Agency is developing the new iServe Nebraska Portal, which is an application for Nebraskans to apply for benefits from Federal and State programs. This application will be replacing ACCESSNebraska, the current application used by Nebraskans to apply for benefits. For the implementation phase of the project, the Agency was only allocating costs to the following four programs: LIHEAP, TANF, SNAP, and Medicaid. However, there are other Federal and State programs that will utilize the iServe application. We asked for documentation to support that these were the only four programs that were benefiting from this stage of the project. The Agency provided correspondence from its Federal contacts, which stated: ?As long as SNAP, Medicaid, LIHEAP, and TANF are the only benefiting programs for the State?s iServe Nebraska Portal project, the State may just include these four programs in the development of its cost allocation plan. If/when the State decides to add other Federal programs that will benefit from enhancements to the portal, it will need to revisit and adjust its cost allocation plan.? We asked again for documentation, such as internal planning documents, to support that these were the only four programs benefiting from this stage of the project. The Agency replied that it did not have the documentation at this time. The iServe IAPD H971 ? Shared cost center allocated $6,019,121 for the quarter ended June 30, 2022. We were unable to determine questioned costs as we were not able to determine which Federal and State program should receive an allocation, and the basis for how the costs would be allocated to these programs. Cause: Inadequate procedures to ensure that system reports were set up correctly, employees coded their time correctly, and allocations were adequately supported and calculated correctly. Effect: Without adequate documentation to support the allocation of costs, there is increased risk of programs not being charged the proper amounts. Recommendation: We recommend the Agency improve procedures to ensure that employee pay is recorded correctly in E1, system reports are set up correctly, and costs are properly allocated and charged. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance to Needy Families; AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.658 ? Foster Care Title IV-E ? Allowable Cost/Cost Principles Grant Number & Year: 1901NETANF, FFY 2019; 2101NEFOST, FFY 2021; 2201NEFOST, FFY 2022; 202121S251443, FFY 2021; 202222S251443, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 200.303 (January 1, 2022): The non-Federal entity must: (a) Establish and maintain effective internal control the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per the CAP, ?The RMTS Administrator is an employee of the Division of Children and Family Services and is responsible for . . . . verification that all forms are submitted to the Completed Surveys database, review of the worker entries to validate consistent practice among participants . . . .? Per the CAP, ?Each worker should be trained in the completion of the observation form and to the importance of providing accurate and timely responses.? According to RMTS Explanations: 1. Case Work ? Select this item if you were working on a specific case at the observation time. If you select this item you will be asked to enter the NFOCUS master case number. If there is not an NFOCUS master case, use any other number or description that can be used to identify the case . . . . According to the RMTS Instructions for the Worker: ?After the observation form has been submitted and validated (if selected for validation), it is reviewed by a member of the CFS and Cost Accounting Office for consistency.? According to the RMTS Instructions for the Supervisor: ?If you agree with the worker?s selections, you can click the ?VALIDATION? button. If you do not agree with the worker?s selections, you need to confer with the worker on the selection process and reach agreement on the proper selections for the form. Make updates as needed, and click the ?VALIDATION? button to attach the supervisor?s electronic signature and validate the form.? Good internal control and sound accounting practices require procedures to ensure that staff know how to complete accurate random moment time studies, which are used to allocate costs to Federal programs. Condition: The Agency did not have adequate procedures to ensure the accuracy of the RMTS. A similar finding was noted in the prior audit. Repeat Finding: 2021-033 Questioned Costs: $14,131 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The RMTS is conducted on an ongoing basis to provide data for the allocation of direct and indirect costs to various programs. The objective is to identify employee efforts directly related to programs administered by the Agency. We tested 48 validated RMTS observations and noted that inadequate documentation was provided on 11 of them. We noted the following: ? For two of four Foster Care IV-E observations tested, the observations should have been reported as Foster Care Non IV-E per the documentation in the case files. For one of these observations, the case worker noted in the comments that she selected the wrong option. However, it was still validated without correction. ? For five of 21 SNAP observations tested, the RMTS observation form appeared to have been completed incorrectly by the case worker. For two of these observations, the case worker selected the SNAP program; however, per the case files, the case worker appeared to be working on other programs along with SNAP at the time of the observation or was not working on SNAP at all at the time of the observation. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. For the other three observations, the case workers did not document which cases they were working on. ? For four of 12 TANF observations tested, the RMTS observation forms appeared to have been completed incorrectly by the case workers. The case workers selected the TANF program; however, per the case files, the case workers appeared to be working on other programs along with TANF at the time of the observation, or, for one case, not working on TANF at all. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. Total known Federal payment errors, amount tested, error rate (amount of errors/ amount tested), total dollars charged via RMTS, and potential dollars at risk (dollar rate multiplied by the population total dollars charged) are summarized below by program: See Schedule of Findings and Questioned Costs for chart/table. The APA also inquired with Agency staff to determine if they were provided training in how to complete the random moment time studies. For one individual, the Agency was unable to provide documentation to support that the employee selected had completed RMTS training. Cause: The Agency?s training of staff and supervisory reviews of RMTS observations were not sufficient to ensure the observations were accurately completed. Effect: Random moment sampling is based on the laws of probability, which state, in essence, that there is a high probability that a relatively small number of random observations will yield an accurate depiction of the overall characteristics of the population for which the sample was taken. If RMTS observations are not accurate, there is an increased risk costs will be allocated incorrectly between programs. Recommendation: We recommend the Agency improve procedures to ensure that random moment observations are accurate and adequately reviewed. Management Response: The Agency agrees.
Program: AL 12.400 ? Military Construction, National Guard ? Suspension and Debarment Grant Number & Year: W91243-18-2-2001, FFY 2018; W91243-19-2-2001, FFY 2019 Federal Grantor Agency: U.S. Department of Defense Criteria: 2 CFR ? 180.300 (January 1, 2022) provides, in relevant part, the following: When you enter into a covered transaction with another person at the next lower tier, you must verify that the person with whom you intend to do business is not excluded or disqualified. You do this by: (a) Checking the SAM [System for Award Management] Exclusions; or (b) Collecting a certification from that person; or (c) Adding a clause or condition to the covered transaction with that person. Section 101.d of the State?s Military Construction Cooperative Agreements (MCCA) with the National Guard Bureau (NGB) states, ?Although this MCCA is not an appendix to the Master Cooperative Agreement (MCA) (October 2015 revision) which includes Attachment A thereto, the terms of the MCA are incorporated herein by reference. The MCA contains provisions required by federal law and regulation which apply to this MCCA and govern it.? Section 808 of the MCCA refers to Section 808 of the MCA for suspension and debarment requirements. Section 808 of the State?s MCA with the NGB provides the following: Non-federal entities and contractors are subject to the non-procurement debarment and suspension regulations implementing Executive Orders 12549 and 12689, 2 CFR part 180. These regulations restrict awards, subawards, and contracts with certain parties that are debarred, suspended, or otherwise excluded from or ineligible for participation in Federal assistance programs or activities. The grantee agrees to comply with the DOD implementation of 2 CFR Part 180 (at 2 CFR Part 1125) by checking the Excluded Parties List System (EPLS) at the current OMB website to verify contractor eligibility to receive contracts and subcontracts resulting from this Agreement. The grantee and subrecipients shall not solicit offers from, nor award contracts to contractors listed in EPLS. This verification shall be documented in the grantee and subrecipient contract files, and shall be subject to audit by the grantor and Federal/State audit agencies. A good internal control plan requires adequate procedures to ensure the Agency does not utilize contractors who are barred from participation in Federal programs due to improprieties. Good internal control also requires that procedures performed be adequately documented. Condition: For four of four contractors tested, the Agency did not have documentation on file to support that it verified the contractors were not excluded, suspended, or otherwise debarred from participation in Federal programs. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: The Agency stated that it reviews the SAM website to ensure contractors are not barred from participation in the program. However, the Agency did not have documentation on file to support that the review occurred. The Agency included clauses in its contracts requiring the contractors to verify that subcontractors were not debarred from participation in Federal programs. However, the contracts did not include clauses requiring the contractors to certify they were not debarred from participation in Federal programs. The contractors tested received a total of $21,294,705 in program funds during the fiscal year ended June 30, 2022. We reviewed the SAM website for the contractors tested, and none were excluded by the Federal government. Cause: Inadequate procedures. Effect: Increased risk for loss or misuse of funds. Recommendation: We recommend the Agency implement procedures to ensure it completes documented annual reviews of the SAM website for its contractors. Management Response: The Construction and Facility Maintenance Office concurs with the finding stated above.
Program: AL 12.401 ? National Guard Military Operations and Maintenance (O&M) Projects ? Cash Management & Reporting Grant Number & Year: Appendices ? W91243-20-2-1001, FFY 2020; W91243-21-2-1001, FFY 2021; W91243-21-2-1005, FFY 2021; W91243-21-2-1021, FFY 2021; W91243-22-2-1001, FFY 2022; W91243-22-2-1002, FFY 2022; W91243-22-2-1003, FFY 2022; W91243-22-2-1005, FFY 2022; W91243-22-2-1024, FFY 2022 Federal Grantor Agency: U.S. Department of Defense Criteria: Per 2 CFR ? 1128.100 and 2 CFR ? 1128.200 (January 1, 2022), the Department of Defense adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR parts 200.302, 200.303, and 200.305. Per 2 CFR ? 200.303 (January 1, 2022): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Title 2 CFR ? 200.302 (January 1, 2022) requires financial management systems of the State sufficient to permit both the preparation of required reports and the tracing of funds to expenditures adequate to establish that the use of the funds was in accordance with applicable regulations. EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. Title 2 CFR ? 200.305(a) (January 1, 2022) states, in part, ?For states, payments are governed by Treasury-State Cash Management Improvement Act (CMIA) agreements and default procedures codified at 31 CFR part 205 . . . .? Title 31 CFR Part 205 (July 1, 2021) implements the Cash Management Improvement Act (CMIA) and requires State recipients to enter into agreements that document accepted funding techniques for Federal assistance programs. The CMIA Agreement between the State of Nebraska, Secretary of the Treasury, and U.S. Department of the Treasury, for the period July 1, 2021, through June 30, 2022, allows the program to request Federal funds in accordance with the monthly draw funding technique by which the amount requested shall be based on estimated costs to be incurred in the next month. Master Cooperative Agreement (October 2020), Article V ? Payment, Section 503, Payment by Advance Method, states, ?The advance payment method shall be according to procedures established in current PARC policy, NGR 5-1 Chapter 11 or successor CNGB I & M, and 2 CFR ?200.305.? National Guard Regulation (NGR) 5-1, National Guard Grants and Cooperative Agreements, Section 11-5, Advance Payment Method, Section (5), states in part, ?[T]he grantee agrees to minimize the time elapsing between the transfer of funds from the U.S. Treasury and their disbursement by the State. (no more than 45 days)?. NGR 5-1 was in effect during the entire audit period but has since been superseded by CNGBI 9101.00, which went into effect on January 27, 2023. Instructions for OMB Standard Form 270 (REV. 1/2016) includes the following for line 11a, ?Enter program outlays to date (net of refunds, rebates, and discounts), in the appropriate columns. For requests prepared on a cash basis, outlays are the sum of actual cash disbursements for goods and services, the amount of indirect expenses charged, the value of in- kind contributions applied, and the amount of cash advances and payments made to subcontractors and subrecipients.? A good internal control plan would include procedures to ensure that the time between the drawdown of Federal funds and disbursements are minimized and in compliance with State of Nebraska CMIA Agreement and National Guard Regulations. Condition: The Agency was not in compliance with the Federal cash management requirements during the fiscal year and did not properly report program outlays on the OMB Standard Form (SF) 270. A similar finding was noted in the prior audit. Repeat Finding: 2021-059 Questioned Costs: None Statistical Sample: No Context: We tested 25 drawdowns and noted the following: ? Fourteen drawdowns were not in compliance with NGR 5-1. Ten of the draws were expended from 46 to 334 calendar days after the drawdown of Federal funds. The other four draws had yet to be fully expended as of February 9, 2023. The table below provides a summary of the 14 draws: See Schedule of Findings and Questioned Costs for chart/table. ? In addition, four draws were not in compliance with CMIA Agreement requirements. Advance amounts were requested based on estimated costs to be incurred during the month covered by the requests. To determine the reasonableness of the estimates, the APA determined the time it took the Agency to expend amounts advanced (without consideration of any cash on hand). Four draws were expended between 64 and 110 days after the drawdown of Federal funds. ? For 24 of 25 SF 270?s tested, the Agency did not properly report total program outlays on the OMB SF-270 report. The Military reported the total drawdowns for the program to date, rather than actual cash disbursements, as total program outlays. The variance between what was reported and what should have been reported ranged from an underreporting of $56,356 to an overreporting of $2,310,585, with a net total overreporting of total program outlays by $10,983,232 for the 25 reports tested. Cause: Inadequate procedures for coding funds and estimating cash needs for the upcoming month. The Agency drew down funds from the wrong Federal program. The Agency has recorded expenditures for two capital construction projects dating back to December 2019. The Agency reports expenditures for the projects under the Military Construction program (AL 12.400), stating that the projects are Federally funded under AL 12.400. However, it drew down funds for the projects under AL 12.401. Regarding SF-270 reporting, the Agency thought that the report instructions requiring reporting of actual cash disbursements as total program outlays did not apply to it as an ?advance State? (a State that is authorized to request funds on an advance basis). Effect: The Agency is not in compliance with Federal cash management and reporting requirements, which could result in sanctions. Additionally, there is an increased risk for the loss of Federal funding. Recommendation: We recommend the Agency ensure that the amount of time between the Federal draw and the disbursement of funds by the State is minimized and in compliance with the State of Nebraska CMIA Agreement and National Guard Regulations. We also recommend the Agency report total program outlays in compliance with Federal requirements. Management Response: The United States Property and Fiscal Office (USPFO) concurs with the recommendation.
Program: Various, including AL 84.010 ? Title I Grants to Local Educational Agencies; AL 93.568 ? Low-Income Home Energy Assistance (LIHEAP); and AL 93.659 ? Adoption Assistance ? Cash Management Grant Number & Year: Various Federal Grantor Agency: Various Criteria: 31 CFR ? 205.12 (July 1, 2021) states, in part, the following: (a) We and a State may negotiate the use of mutually agreed upon funding techniques. We may deny interest liability if a State does not use a mutually agreed upon funding technique. Funding techniques should be efficient and minimize the exchange of interest between States and Federal agencies. (b) We and a State may base our agreement on the sample funding techniques listed in paragraphs (b)(1) through (b)(5) of this section . . . . * * * * (3) Average clearance means that a Federal Program Agency, on the dollar-weighted average day of clearance of a disbursement, transfers to a State a lump sum equal to the actual amount of funds that the State is paying out. The dollar-weighted average day of clearance is the day when, on a cumulative basis, 50 percent of the funds have been paid out. The dollar-weighted average day of clearance is calculated from a clearance pattern, consistent with ?205.20. Per 31 CFR ? 205.19(e) (July 1, 2021) states, in part, the following: A State may use actual data, a clearance pattern, or statistical sampling to calculate interest. A clearance pattern used to calculate interest must meet the standards of ? 205.20. Per 31 CFR ? 205.20 (July 1, 2021): States use clearance patterns to project when funds are paid out, given a known dollar amount and a known date of disbursement. A State must ensure that clearance patterns meet the following standards: * * * * (b) A clearance pattern must accurately represent the flow of Federal funds under the Federal assistance programs to which it is applied. Per 31 CFR ? 205.22(b) (July 1, 2021): An authorized State official must certify that a clearance pattern corresponds to the clearance activity of the Federal assistance program which it is applied. An authorized State official must re-certify the accuracy of a clearance pattern at least every five years. . . . A State can begin to use a new clearance pattern on the date the new clearance pattern is certified. Condition: The Agency lacked adequate procedures to ensure that Federal funds were drawn in compliance with the Treasury Service Agreement (TSA). Repeat Finding: No Questioned Costs: N/A Statistical Sample: No Context: Twelve programs for the State use ?Average Clearance? to request Federal funds. For Average Clearance, the funds are requested so that they are deposited on the dollar-weighted average day of clearance for the disbursement. Clearance patterns are recalculated every five years. The Agency uses historical data to determine the number of days each check was outstanding (clearance time). The clearance time is multiplied by the percentage of total disbursements for those checks, and a dollar-weighted average day of clearance is determined by summing the clearance factor for each day. A clearance pattern of 3.43 days would have 57% of funds deposited on day three and 43% deposited on day four. On December 14, 2021, the Agency and the U.S. Department of the Treasury signed the TSA, establishing the Letter of Credit clearance patterns to be used for the period of July 1, 2021, through June 30, 2022. As of the date of the APA?s review in November 2022, however, the Agency had not yet updated the Delay of Draw (DOD) system to reflect these clearance patterns. Consequently, the Agency continued to draw Federal funds using the fiscal year 2021 clearance patterns, some of which were last calculated in fiscal year 2016. The APA identified three Federal programs that were drawing Federal funds at a faster rate than allowed by the TSA. ? AL 84.010 draws funds through multiple DOD #?s, including DOD #0999. DOD #0999 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.43 days for fiscal year 2022. This resulted in the early draw of 43% of AL 84.010 funds drawn through DOD #0999. ? AL 93.568 draws funds through multiple DOD #?s, including DOD #2761. DOD #2761 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.37 days for fiscal year 2022. This resulted in the early draw of 37% of AL 93.568 funds drawn through DOD #2761. ? AL 93.659 draws funds through multiple DOD #?s, none of which were properly updated from a 3-day clearance pattern to the certified clearance pattern of 4.24 days. This resulted in the early draw of AL 93.659 funds by 1.24 days. During testing of 25 Federal deposits, we noted the following: ? For one deposit tested, the Agency drew down $117,779 more in Federal funds than there were recorded as expenditures in E1, the State?s accounting system. The Agency held these funds throughout the fiscal year, continuing to do so until the APA raised concerns about them. See Schedule of Findings and Questioned Costs for chart/table. ? Due to the previously noted error in updating the DOD system, for 2 of 25 Federal draws tested, the APA noted that the Agency drew Federal funds earlier than were allowed under the TSA. As the State would have been entitled to the overdrawn funds the following day, there are no questioned costs. See Schedule of Findings and Questioned Costs for chart/table. Cause: Inadequate review of drawdowns. Agency staff stated that they had not had time to update the clearance patterns in the DOD system. Effect: Without adequate procedures to ensure that Federal drawdowns comply with the TSA, there is an increased risk of noncompliance with Federal requirements, which could lead to interest penalties and sanctions. Recommendation: We recommend the Agency strengthen its procedures for ensuring that clearance patterns are updated in a timely manner to comply with the TSA, and draws are supported by expenditures in the accounting system. Management Response: Management agrees with the finding and has updated clearance patterns to align with the most recent TSA agreement.
Program: AL 84.010 ? Title I Grants to Local Educational Agencies ? Allowability and Subrecipient Monitoring Grant Number & Year: S010A190027, FFY 2020; S010A200027, FFY 2021 Federal Grantor Agency: U.S. Department of Education Criteria: Per 2 CFR ? 3474.1 (January 1, 2022), the U.S. Department of Education adopted the OMB Uniform Guidance in 2 CFR part 200, except for 2 CFR ? 200.102(a) and 200.207(a). Per 2 CFR ? 200.403 (January 1, 2022), allowable costs must be necessary, reasonable, and adequately documented. 2 CFR ? 200.430(i)(1) (January 1, 2022) states, in relevant part, the following: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; (ii) Be incorporated into the official records of the non-Federal entity; (iii) Reasonably reflect the total activity for which the employee is compensated by the non-Federal entity, not exceeding 100% of compensated activities . . . . ; (iv) Encompass federally-assisted and all other activities compensated by the non-Federal entity on an integrated basis, but may include the use of subsidiary records as defined in the non-Federal entity?s written policy; (v) Comply with the established accounting policies and practices of the non-Federal entity . . . . ; and * * * * (vii) Support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. Enclosure A of the ?Letter to Chief State School Officers on Granting Administrative Flexibility for Better Measures of Success? (September 7, 2012) provides guidelines for local educational agencies (LEAs), using a substitute system for time-and-effort reporting. Enclosure A states, in relevant part, the following: (3) Employee schedules must: a. Indicate the specific activity or cost objective that the employee worked on for each segment of the employee?s schedule; b. Account for the total hours for which each employee is compensated during the period reflected on the employee?s schedule; and c. Be certified at least semiannually and signed by the employee and a supervisory official having firsthand knowledge of the work performed by the employee. 2 CFR ? 200.332 (January 1, 2022) states, in relevant part, the following: All pass-through entities must: * * * * (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. Pass-through entity monitoring of the subrecipient must include: * * * * (2) Following-up and ensuring that the subrecipient takes timely and appropriate action on all deficiencies pertaining to the Federal award provided to the subrecipient from the pass-through entity detected through audits, on-site reviews, and written confirmation from the subrecipient . . . . A good internal control plan requires that adequate documentation be maintained to support amounts claimed by and paid to subrecipients. Good internal control also requires procedures to follow up with subrecipients to ensure they are correcting deficiencies and in compliance with applicable regulations. Condition: The Agency lacked procedures to ensure that subrecipients documented their use of Federal awards appropriately. Repeat Finding: No Questioned Costs: $145,101 known (S010A190027, $8,041; S010A200027, $137,060) Statistical Sample: No Context: We randomly selected 25 subrecipient payments and also chose the largest subrecipient payment for testing. We noted the following: ? Several employees? salaries and benefits were included in the reimbursement requests; however, the Agency did not require subrecipients to submit documentation for these expenditures, other than reports from their accountings systems, at the time of reimbursement. We provided the Agency with an opportunity to request documentation from its subrecipients to support that their salaries and benefits expenses were allowable and in accordance with Federal cost principles; however, two of the subrecipients did not provide adequate support to show that their salaries and benefits were allocable to the grant, resulting in $8,041 sample questioned costs and $137,060 non-sample questioned costs. ? The Agency?s procedure is to perform fiscal reviews of each subrecipient at least once every three years. We reviewed the most recent fiscal reviews for the same 26 subrecipients selected for testing above. For five of these reviews, the Agency noted that the subrecipient did not maintain adequate documentation for salaries and benefits. When we inquired with the Agency regarding what had been done to follow up on its findings, the Agency replied that the findings did not require follow-up. Payment errors noted for the sample tested were $8,041. The total sample tested was $1,494,006. Subrecipient aid payments for the fiscal year ended June 30, 2022, totaled $91,043,602. The sample population was $84,396,850 (total population $91,043,602 less $6,646,752 to largest subrecipient that was separately determined to be allowable). Based on the sample tested, the case error rate was 8% (2/25). The dollar error rate for the sample was 0.54% ($8,041/$1,494,006), which estimates the potential dollars at risk for fiscal year 2022 to be $455,753 (dollar rate multiplied by the population). Cause: Inadequate procedures. Effect: Without adequate supporting documentation and monitoring procedures, there is an increased risk that Federal awards could be used for unallowable costs. Recommendation: We recommend the Agency improve procedures to monitor subrecipients, including reviewing detailed supporting documentation for payroll expenses and following up with subrecipients to ensure that they correct errors noted. Management Response: The Department agrees the two subrecipients sampled did not complete one time and effort certification semi-annually (rather completed annually instead) or with all language suggested in the guidelines from the U.S. Department of Education. However, the Department disagrees with the reimbursement being questioned costs as the time and effort certifications demonstrated adequate documentation to support the employees? activities were allowable for the Title I grant. In the absence of this information, the Department submitted affidavits from the two LEA?s supervisory staff with personal knowledge of the work performed consistent with the U.S. Department of Education?s audit resolutions practices; whereas the APA does not consider documentation after the fact to be adequate to eliminate the finding. The findings noted in the subrecipient fiscal monitoring exit letters were identified for technical assistance purposes only and not considered to have met a level of materiality that required a corrective action plan. Corrective action plans are clearly noted in subrecipient fiscal monitoring exit letters when issued and proper follow-up action is taken when this occurs. Technical assistance was provided to each of the subrecipients at the time of the monitoring review as well as to all subrecipients periodically throughout the year. APA Response: Per the Uniform Guidance, questioned costs include expenditures that lack adequate supporting documentation at the time of the audit. 2 CFR ? 200.430(i)(1) (January 1, 2022), as referenced in the report comment, says that such documentation must ?accurately reflect the work performed? and be ?supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated.? Affidavits dated February 27, 2023, some 18 months after the salary and benefit expenses occurred, cannot possibly satisfy either of these requirements and are, therefore, not acceptable. As the documentation provided did not meet the minimum requirements set forth in Uniform Guidance and guidance issued by the U.S. Department of Education, the expenditures at issue must be considered questioned costs. Moreover, the Uniform Guidance requires the Agency, as the pass-through entity, to ensure that the subrecipient takes timely and appropriate action to address deficiencies identified not only during audits but also from the Agency?s own reviews. The Agency has noted issues similar to those addressed by the APA ? namely, that the subrecipients have lacked adequate supporting documentation for salary and benefit expenses. The Agency performs subrecipient fiscal monitoring for most subrecipients only every third year. Thus, effective follow-up procedures, as required by 2 CFR ? 200.332 (January 1, 2022), are needed to ensure that subrecipients implement the technical assistance provided by the Agency.
Program: AL 93.069 ? Public Health Emergency Preparedness (PHEP); AL 93.889 ? National Bioterrorism Hospital Preparedness Program (HPP) ? Allowability & Subrecipient Monitoring Grant Number & Year: NU90TP922039, Project Period through 6/30/2024; U3REP190555C, Project Period through 6/30/2024; U3REP190555B, Project Period through 6/30/2024 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.352(d) (October 1, 2021) requires a pass-through entity 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.? 45 CFR ? 75.302(a) (October 1, 2021) requires the State to have accounting procedures sufficient to allow for ?the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.? Good internal control requires procedures to ensure financial activity is properly recorded in the accounting system. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. A good internal control plan requires procedures to ensure subrecipients comply with applicable cost principles. 45 CFR ? 75.405(a) (October 1, 2021) states the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. 45 CFR ? 75.430(i)(1) (October 1, 2021) states, in part, the following: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; * * * * (vii) Support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards . . . . 45 CFR ? 75.431(c) (October 1, 2021) states the following: The cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker's compensation insurance (except as indicated in ? 75.447); pension plan costs (see paragraph (i) of this section); and other similar benefits are allowable, provided such benefits are granted under established written policies. Such benefits, must be allocated to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities, and charged as direct or indirect costs in accordance with the non-Federal entity's accounting practices. A good internal control plan requires procedures to ensure salaries and wages charged to subawards are properly documented, and payments made to subrecipients apply to work performed under the subaward project description. Condition: Subrecipient monitoring procedures were inadequate. A similar finding has been noted in prior audits since 2014. Repeat Finding: 2021-035 Questioned Costs: $221,944 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The Agency made 213 aid payments, totaling $5,444,562, during the fiscal year ended June 30, 2022. This included payments to 32 subrecipients. Subrecipient reimbursement requests include an invoice and Budget Workbook showing expenses by category; however, no source documentation, such as invoices and timesheets, were submitted. The Agency has subrecipient monitoring procedures that include financial monitoring, such as desk reviews; however, no financial monitoring was performed during the fiscal year. We selected a sample of 22 payments, totaling $721,921, and offered the Agency the opportunity to gather supporting documentation from subrecipients. Documentation submitted was not adequate for 16 of 22 payments tested. We noted the following: ? Thirteen payments lacked adequate documentation to support that payroll and fringe benefits charged to the grant were allowable and in accordance with Federal cost principles. In some cases, timesheets were not provided. In other cases, timesheets were provided, but there was not adequate documentation to support the employees? salaries or benefits received. ? Six payments did not have adequate documentation to support non-payroll charges. o Allocated costs for facilities, phones, storage, and other charges did not have adequate support for the amount allocated to the grant. For example, the cost of an audiovisual system for the subrecipient?s conference room was charged 53.8% to the PHEP grant, which did not appear reasonable given that only 0.5 FTE was charged to the grant. The subrecipient indicated that funds were pulled from PHEP because PHEP had money left to spend. This is not allowable, as Federal cost principles require costs to be charged in accordance with the relative benefits received. o We also noted a contract that was not charged at the hourly rate per contract terms, and various travel charges that were not supported. Aid payments for the fiscal year ended June 30, 2022, totaled $5,444,562. Federal payment errors noted were $221,944. The total sample tested was $721,921. The dollar error rate for the sample was 30.74%. This estimates the potential dollars at risk for the fiscal year to be $1,673,658 (dollar error rate multiplied by the population). Cause: The Agency?s procedures for subrecipient monitoring were not followed. Effect: Without adequate subrecipient monitoring procedures, there is an increased risk for the misuse of Federal funds and noncompliance with Federal regulations. Recommendation: We recommend the Agency perform adequate subrecipient monitoring to ensure both the allowability of costs and adherence to Federal regulations. Management Response: The Department partially agrees with the condition. The FTE position with primary monitoring responsibilities for the PHEP and HPP program areas was vacant during this period, restricting the degree of financial monitoring performed. While there were costs within the APA?s sample which appear inadequately supported by subrecipient records, there are included in APA?s questioned costs examples of payroll costs which DHHS believes it will receive partial or complete support for. The Department will work with subrecipients to determine which costs have additional support and which do not. For costs ultimately found unsupported, it will request repayment. APA Response: As noted above, no financial monitoring was performed by the Agency during the fiscal year. The Agency was allowed over three weeks to obtain documentation from the subrecipients; however, $221,944 of the sample remained unsupported.
Program: AL 93.069 ? Public Health Emergency Preparedness ?Matching and Reporting Grant Number & Year: NU90TP922039-02, Budget Period through 6/30/2021 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.302(a) (October 1, 2021) states the following: Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non- Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.306(b) (October 1, 2021) states, in part, the following: For all Federal awards, any shared costs or matching funds and all contributions, including cash and third party in-kind contributions, must be accepted as part of the non-Federal entity?s cost sharing or matching when such contributions meet all of the following criteria: * * * * (3) Are necessary and reasonable for accomplishment of project or program objectives; (4) Are allowable under subpart E of this part; 45 CFR ? 75.403(a) requires costs to be ?necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.? 45 CFR ? 75.405(a) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. 45 CFR ? 75.430(i)(1) states, in part, the following: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: * * * * (vii) Support the distribution of the employee's salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. A good internal control plan requires procedures to ensure the adequacy of documentation to support that matching funds are in accordance with Federal requirements. Condition: The Agency lacked documentation to support the amount of matching funds provided and reported on the annual Federal Financial Report. A similar finding was noted in the prior audit. Repeat Finding: 2021-036 Questioned Costs: Unknown Statistical Sample: No Context: For the NU90TP922039-02 grant, the Agency reported $8,666,524 in Federal grant expenditures and $866,652 in State matching expenditures. The matching expenditures included State General Fund payroll expenditures for various employees. The Agency lacked adequate documentation to support the salary percentages used for PHEP matching. We reviewed the four employees with over $100,000 included in PHEP matching, as detailed in the following table: See Schedule of Findings and Questioned Costs for chart/table. Based on their job titles, it appears unreasonable for any of the four employees to have spent so much of their time solely on PHEP activities. Cause: Inadequate procedures Effect: Non-compliance with Federal requirements, which could lead to Federal sanctions. Recommendation: We recommend the Agency implement procedures to ensure matching amounts are adequately supported and in accordance with Federal requirements. Management Response: The Agency does not agree. The sample included in this finding does not align with the match currently reported for PHEP budget period 2 on the Department's federal financial reporting. The Department achieved the 10% match requirement in BP2 with unrecovered indirect costs under two subawards with UNMC, which has been documented and approved by the federal partner. Only one of the staff included in APA's sample is claimed as match in any period for PHEP. Angela Ling served as DHHS Incident Commander exclusively during the COVID-19 pandemic. This position reported directly to the DHHS CEO and had direct supervisory authority over PHEP. DHHS provided a job description for this role, which the Department views as 100% in alignment with PHEP domains for the duration of the COVID-19 pandemic. For these reasons, the state-supported payroll costs of this position were included in the state's 10% match documentation for BP3. APA Response: Unrecovered indirect costs by the University of Nebraska Medical Center (UNMC) would cover only $427,977 of the $866,652 match, leaving $438,675 still needed. The job description for the Incident Commander refers to ?Incidents? without specifying whether any such event would pertain solely to a public health emergency. The Incident Commander is charged to both Program 261, which is General Operations, and the same Business Unit as the Chief Information Officer, which would not be exclusively public health emergency. Also, there are no timesheets to support that the Incident Commander was working specifically on public health emergencies. Furthermore, the Incident Commander would cover only $129,551, leaving $309,124 still unsupported. There are no time records supporting the salary percentages used for matching.
Program: AL 93.069 ? Public Health Emergency Preparedness (PHEP); AL 93.889 ? National Bioterrorism Hospital Preparedness Program (HPP) ? Allowability & Subrecipient Monitoring Grant Number & Year: NU90TP922039, Project Period through 6/30/2024; U3REP190555C, Project Period through 6/30/2024; U3REP190555B, Project Period through 6/30/2024 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.352(d) (October 1, 2021) requires a pass-through entity 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.? 45 CFR ? 75.302(a) (October 1, 2021) requires the State to have accounting procedures sufficient to allow for ?the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.? Good internal control requires procedures to ensure financial activity is properly recorded in the accounting system. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. A good internal control plan requires procedures to ensure subrecipients comply with applicable cost principles. 45 CFR ? 75.405(a) (October 1, 2021) states the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. This standard is met if the cost: (1) Is incurred specifically for the Federal award; (2) Benefits both the Federal award and other work of the non-Federal entity and can be distributed in proportions that may be approximated using reasonable methods; and (3) Is necessary to the overall operation of the non-Federal entity and is assignable in part to the Federal award in accordance with the principles in this subpart. 45 CFR ? 75.430(i)(1) (October 1, 2021) states, in part, the following: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; * * * * (vii) Support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards . . . . 45 CFR ? 75.431(c) (October 1, 2021) states the following: The cost of fringe benefits in the form of employer contributions or expenses for social security; employee life, health, unemployment, and worker's compensation insurance (except as indicated in ? 75.447); pension plan costs (see paragraph (i) of this section); and other similar benefits are allowable, provided such benefits are granted under established written policies. Such benefits, must be allocated to Federal awards and all other activities in a manner consistent with the pattern of benefits attributable to the individuals or group(s) of employees whose salaries and wages are chargeable to such Federal awards and other activities, and charged as direct or indirect costs in accordance with the non-Federal entity's accounting practices. A good internal control plan requires procedures to ensure salaries and wages charged to subawards are properly documented, and payments made to subrecipients apply to work performed under the subaward project description. Condition: Subrecipient monitoring procedures were inadequate. A similar finding has been noted in prior audits since 2014. Repeat Finding: 2021-035 Questioned Costs: $221,944 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The Agency made 213 aid payments, totaling $5,444,562, during the fiscal year ended June 30, 2022. This included payments to 32 subrecipients. Subrecipient reimbursement requests include an invoice and Budget Workbook showing expenses by category; however, no source documentation, such as invoices and timesheets, were submitted. The Agency has subrecipient monitoring procedures that include financial monitoring, such as desk reviews; however, no financial monitoring was performed during the fiscal year. We selected a sample of 22 payments, totaling $721,921, and offered the Agency the opportunity to gather supporting documentation from subrecipients. Documentation submitted was not adequate for 16 of 22 payments tested. We noted the following: ? Thirteen payments lacked adequate documentation to support that payroll and fringe benefits charged to the grant were allowable and in accordance with Federal cost principles. In some cases, timesheets were not provided. In other cases, timesheets were provided, but there was not adequate documentation to support the employees? salaries or benefits received. ? Six payments did not have adequate documentation to support non-payroll charges. o Allocated costs for facilities, phones, storage, and other charges did not have adequate support for the amount allocated to the grant. For example, the cost of an audiovisual system for the subrecipient?s conference room was charged 53.8% to the PHEP grant, which did not appear reasonable given that only 0.5 FTE was charged to the grant. The subrecipient indicated that funds were pulled from PHEP because PHEP had money left to spend. This is not allowable, as Federal cost principles require costs to be charged in accordance with the relative benefits received. o We also noted a contract that was not charged at the hourly rate per contract terms, and various travel charges that were not supported. Aid payments for the fiscal year ended June 30, 2022, totaled $5,444,562. Federal payment errors noted were $221,944. The total sample tested was $721,921. The dollar error rate for the sample was 30.74%. This estimates the potential dollars at risk for the fiscal year to be $1,673,658 (dollar error rate multiplied by the population). Cause: The Agency?s procedures for subrecipient monitoring were not followed. Effect: Without adequate subrecipient monitoring procedures, there is an increased risk for the misuse of Federal funds and noncompliance with Federal regulations. Recommendation: We recommend the Agency perform adequate subrecipient monitoring to ensure both the allowability of costs and adherence to Federal regulations. Management Response: The Department partially agrees with the condition. The FTE position with primary monitoring responsibilities for the PHEP and HPP program areas was vacant during this period, restricting the degree of financial monitoring performed. While there were costs within the APA?s sample which appear inadequately supported by subrecipient records, there are included in APA?s questioned costs examples of payroll costs which DHHS believes it will receive partial or complete support for. The Department will work with subrecipients to determine which costs have additional support and which do not. For costs ultimately found unsupported, it will request repayment. APA Response: As noted above, no financial monitoring was performed by the Agency during the fiscal year. The Agency was allowed over three weeks to obtain documentation from the subrecipients; however, $221,944 of the sample remained unsupported.
Program: AL 93.323 - COVID-19 Epidemiology & Laboratory Capacity for Infectious Diseases ? Allowability & Subrecipient Monitoring Grant Number & Year: NU50CK000547-02-03, project period ending 7/31/24; NU50CK000547-01-05, project period ending 7/31/24 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Good internal control requires procedures to ensure payments are allowable and in accordance with contract provisions and Federal requirements. Sound accounting practices and a good internal control plan require that contracts terms be specific, and agencies hold contractors accountable to the contractual terms. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. 45 CFR ? 75.404 (October 1, 2021) states the following: A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. Subaward 56800 (signed 09/2020), Section 2.4, ?BUDGET CHANGES,? states, in part, the following: If funds are reassigned between line items, prior approval from DHHS is required for cumulative budget transfer requests for costs exceeding fifteen percent (15%) of the current total approved budget. Budget revision requests shall be submitted in writing to DHHS. DHHS will provide written notification of approval or disapproval of the request within thirty (30) days of its receipt. 45 CFR ? 75.302(a) (October 1, 2021) requires the State to have accounting procedures sufficient to allow for ?the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award.? 45 CFR ? 75.352(d) (October 1, 2021) requires a pass-through entity 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.? The contract with North End Teleservices (North End) for contact tracing services required all contract employees providing services to complete approved Health Insurance Portability and Accountability Act of 1996 (HIPAA) and privacy training. Condition: The Agency lacked adequate documentation to support that Epidemiology & Laboratory Capacity for Infectious Diseases (ELC) expenditures were allowable and in accordance with Federal requirements. Repeat Finding: 2021-038, 2021-039 Questioned Costs: $804,686 known (NU50CK000547-02-03, $770,515; NU50CK000547-01-05, $34,171) Statistical Sample: No Context: ELC expenditures for the fiscal year totaled $46,707,314, of which $42,444,330 was for payments greater than $50,000. We randomly selected 15 of 148 transaction lines over $50,000 for testing and noted that seven payments tested were not adequately supported. We also tested the two largest journal entries. We noted the following: ? The State was paying a surcharge on services by Nomi Health regarding the COVID-19 testing sites. The State paid service and management fees to Nomi Health that were not outlined in the contract, nor was any amount or percentage of costs agreed upon in the contact. Among six invoices reviewed, $4,186,297 was paid to Nomi Health. Of this amount, $588,582 was for management and service fees. Without contractual language defining these costs, there is not adequate support that the costs are reasonable, necessary, or allowable for the grant. ? For two payments tested to a COVID-19 test kit supplier, there was not adequate support on file to provide assurance that all the test kits ordered were received. Between the two payments, 825 boxes of tests were ordered, costing $201.01/box. The Agency was able to provide a delivery confirmation spreadsheet with tracking numbers that confirmed delivery of a shipment; however, there was no support to show the number of tests or boxes of tests received. Therefore, we question both payments, totaling $165,833. ? The State entered a contract with Ford Storage for providing warehousing, order fulfillment, inventory, and shipping services of personal protective equipment (PPE) and COVID tests. We tested one month?s payment for storage and services. The invoice included $128,800 for storage of 7,001-8,000 pallets for the month; however, the support provided by the Agency was for only 6,730 pallets, which should have been charged at $112,700. Therefore, we question $16,100. The Agency noted that it was working through contractual performance issues with the contractor, including noncompliance on inventory tracking; lack of timely order shipping/delivery; lack of timely response to communications; and concerns regarding the quality of inventory storage. The Agency also noted that payments have been withheld after the June 2022 invoice. Payments made to this contractor under the ELC program during the fiscal year totaled $2,418,470. ? For one subrecipient payment tested, the Agency was reimbursing a Local Health District (LHD) for work related to COVID-19 contact tracing. The subaward was to cover costs of hiring contact tracers for COVID-19 cases in the LHD?s service area. The approved subaward budget included wages and benefits. The payment tested reimbursed the LHD for wages and benefits of $22,459 and contract costs of $34,171. The contract was between the LHD and a Local Community Health Center to provide disease investigators, which was consistent with the purpose of the subaward. However, no additional review or monitoring appears to have been completed to support that the costs were accurate, allowable, in accordance with the contract, and agreed to LHD financial records. Therefore, we question $34,171. Additionally, contractual payments were not included on the original budget of the subaward, which totaled $80,000 of the $240,000 subaward, which is well over the 15% threshold. The Agency confirmed that no amendments to the subaward budget were approved in writing. ? We tested one payment to North End Teleservices for contact tracing services. The vendor provided a spreadsheet with hours worked, related to the invoice period, but did not include any employee identifiers. Because no employee identification was provided for the contact tracers, it was impossible to determine if those workers had completed required HIPAA training. Questioned costs for the random sample amounted to $328,572, and the total sample tested was $3,201,222. The dollar error rate for the sample was 10.26%, which estimates the potential dollars at risk for the fiscal year to be $4,354,788 (dollar error rate multiplied by sample population). We noted an additional $476,114 questioned costs on journal entries tested. Cause: Inadequate control procedures over contractual payments and subrecipient monitoring. The COVID-19 pandemic led the program to managing unprecedented amounts of PPE and test kits shipments and inventory. Verbal arrangements were made with contractors and subrecipient awardees, but those agreements were never put in writing. Effect: Without adequate controls, there is an increased risk for misuse of funds and abuse or fraud to occur. Recommendation: We recommend the Agency implement procedures to ensure that costs are necessary, reasonable, and in accordance with Federal requirements and contract provisions. Management Response: The Agency partially agrees with the finding. The Nomi contract was originally executed through an emergency procurement process by the Agency of Administrative Services in April 2020. State emergency response needs rapidly evolved throughout 2020. Amendment 2, section 2.2.7.h incorporated updated needs and an expansion of scope of this contract, including but not limited to the provision of temporary structures for testing and call center services. This amendment notes that these services were variable. The management fees associated with this work were to cover Nomi?s support and coordination services. While the contractual language could have been more explicit in this respect, the Agency considers these costs reasonable and necessary for the performance of the expanded testing site services, the allowable activity included within the ELC cooperative agreement budget. The Agency retained records of test kit counts included in purchase orders and associated shipping confirmations from the vendor. Test counts included on the bills of lading align with the counts and shipments included on the delivery confirmation spreadsheet noted above The Agency agrees that no formal amendment had been made to the Local Health District (LHD) subaward to explicitly approve the local health Agency to contract with a local hospital for staff support the project, however, all work performed was consistent with the subaward?s purpose and is allowable under the ELC cooperative agreement. With this information provided, we believe $788,586 of the questioned costs to be allowable. APA Response: Regarding the Nomi Contract, as noted above, the additional service and management fees were paid on top of the costs outlined in the Agency-referenced ?Amendment 2, section 2.2.7.h? and were not defined in writing. Without documentation detailing the services received, we could not determine that the $588,582 was reasonable. The delivery confirmation for the test kits did not include the number of tests received, so $165,833 remains questioned. For the subaward payment, there was no review or monitoring performed of the $34,171 to support that the costs were allowable and in accordance with Federal requirements. The question of allowability for these items remains.
Program: Various, including AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.558 ? Temporary Assistance for Needy Families; AL 93.566 ? Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 ? Child Care and Development Block Grant ? Allowable Costs/Cost Principles Grant Number & Year: Various, including 202121S251443, FFY 2021; 202222S251443, FFY 2022; 1901NETANF, FFY 2019; 2101NERCMA, FFY 2021; 2201NERCMA, FFY 2022; 2201NECCDD, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303 (October 1, 2021) states, in relevant part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be necessary, reasonable, and adequately documented. 45 CFR ? 75.302 (October 1, 2021) requires financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 400.1 (January 1, 2022), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. 2 CFR ? 200.303 (January 1, 2022) states, in part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. 45 CFR ? 75.511(b) and 2 CFR ? 200.511(b) (January 1, 2022) state, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that amounts charged to Federal programs are proper. Condition: The Agency did not properly charge Federal programs for seven allocations tested. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-031, 2021-032 Questioned Costs: $44,356 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For seven of 14 allocations tested, we noted the following: ? We tested the allocation of cost center 25C21940 Field Office Resource Development for the quarter ended September 30, 2021, which is allocated based on Time & Effort reports. The payroll costs for 85 employees were charged to the cost center; however, four of the employees? payroll costs should not have been charged to the cost center. The four employees tested included a Federal Aid Administrator, a Program Accuracy Specialist, and two Office Specialists. The supervisors they worked with were not charged to this cost center, and the employees were not employed as Resource Developers, which was the job title of most of the employees included in this cost center. As a result of these employees being charged to the Resource Development cost center instead of their appropriate cost centers, Child Care and Development, Foster Care, Adoption Assistance, Guardianship Assistance, and Medicaid were not charged correctly, ranging from undercharges of $2,653 to overcharges of $2,402. Additionally, we were unable to determine how the payroll costs of $9,858 to the Federal Aid Administrator should have been allocated. The Resource Development cost center allocated $1,444,162 for the quarter ended September 30, 2021. A similar finding was noted in the prior audit. ? We tested the allocation of cost center 25C20680 Legal Services General Legal Teams for the quarter ended June 30, 2022, which is allocated based on Time & Effort reports. The payroll costs for a Legislative Coordinator were recorded to this cost center during the quarter. However, these costs should have been recorded to cost center 25C20720 Communications and Legislative Services Administration. As a result, this employee?s payroll costs of $15,777 during the quarter were not allocated to Federal programs correctly. We were unable to determine how these payroll costs should have been allocated. The Legal Services General Legal Teams cost center allocated $1,332,052 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21960 Field Office Social Services Casework for quarter ended September 30, 2021, which is allocated based on random moment time studies (RMTS) results. The Bridges to Independence program and Guardianship Assistance program should have been allocated $1,464 each from this cost center; however, the Agency did not include these programs in the allocation. As a result, the Federal grants for Refugee and Entrant Assistance, Child Care and Development, Foster Care, Adoption Assistance, Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Medicaid were overcharged, ranging from $3 to $982, and the Guardianship Assistance grant was undercharged $732. The Field Office Social Services Casework cost center allocated $8,099,617 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C21920 Field Office Child Protection & Safety Services for the quarter ended June 30, 2022, which is allocated based on RMTS results. The Agency began using a new RMTS system in January 2022; however, the Agency did not set up the quarterly summary reports correctly. Below are the issues noted: o RMTS observations for Trial Home Visits were not included in the allocation. As a result, State programs were undercharged, and Federal programs were overcharged. o The RMTS observations for Child Protection Initial Assessment were not properly allocated. As a result, Foster Care was overcharged, and Adoption and Guardianship were undercharged. o The RMTS observations for Before or After Work Hours were incorrectly included in the State?s allocation. As a result, Federal programs were undercharged. In total, Federal grants for Adoption Assistance, Foster Care, and Guardianship Assistance were undercharged $28,560, $113,762, and $1,990, respectively. The Field Office Child Protection & Safety Services cost center allocated $12,429,881 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21910 Field Office Administration for the quarter ended June 30, 2022, which is allocated based on labor hours. The Agency did not include all of the applicable labor hours for the Medicaid program. As a result, the Federal grants for Adoption Assistance, Foster Care, Guardianship Assistance, Refugee and Entrant Assistance, Child Care and Development, TANF, and SNAP were overcharged, ranging from $265 to $30,556, and the Medicaid grant was undercharged $235,906. The Field Office Administration cost center allocated $3,236,547 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C20990 IST Application NFOCUS Applications for the quarter ended September 30, 2021, which is allocated based on client counts per NFOCUS/MMIS reports. We noted that the Foster Care and TANF recipient counts used in the allocation did not agree to support. The Foster Care count included 71 clients that were paid with State funds, resulting in $265 being overcharged to the Foster Care grant, and the TANF count included 48 clients that were paid with State funds, resulting in $358 being overcharged to the TANF grant. Additionally, we were unable to trace the member counts to documentation that supported allocating $1,853,284 to Medicaid and $283,190 to the Children?s Health Insurance Program (CHIP). The Agency did not maintain the member count reports used at the time of the allocation. The Agency was able to generate a historical report; however, while the report amounts were similar, they did not agree with the counts used in the allocation. The Agency did maintain system summary reports at the time of the allocation, and the total counts on the summary reports did agree to amounts used for the allocation. However, as the summary reports used did not maintain the detail of members counted, we could not verify the accuracy of the reports used. The IST Application Services NFOCUS Applications cost center allocated $3,800,340 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C23823 iServe IAPD H971 ? Shared for the quarter ending June 30, 2022. The Agency is developing the new iServe Nebraska Portal, which is an application for Nebraskans to apply for benefits from Federal and State programs. This application will be replacing ACCESSNebraska, the current application used by Nebraskans to apply for benefits. For the implementation phase of the project, the Agency was only allocating costs to the following four programs: LIHEAP, TANF, SNAP, and Medicaid. However, there are other Federal and State programs that will utilize the iServe application. We asked for documentation to support that these were the only four programs that were benefiting from this stage of the project. The Agency provided correspondence from its Federal contacts, which stated: ?As long as SNAP, Medicaid, LIHEAP, and TANF are the only benefiting programs for the State?s iServe Nebraska Portal project, the State may just include these four programs in the development of its cost allocation plan. If/when the State decides to add other Federal programs that will benefit from enhancements to the portal, it will need to revisit and adjust its cost allocation plan.? We asked again for documentation, such as internal planning documents, to support that these were the only four programs benefiting from this stage of the project. The Agency replied that it did not have the documentation at this time. The iServe IAPD H971 ? Shared cost center allocated $6,019,121 for the quarter ended June 30, 2022. We were unable to determine questioned costs as we were not able to determine which Federal and State program should receive an allocation, and the basis for how the costs would be allocated to these programs. Cause: Inadequate procedures to ensure that system reports were set up correctly, employees coded their time correctly, and allocations were adequately supported and calculated correctly. Effect: Without adequate documentation to support the allocation of costs, there is increased risk of programs not being charged the proper amounts. Recommendation: We recommend the Agency improve procedures to ensure that employee pay is recorded correctly in E1, system reports are set up correctly, and costs are properly allocated and charged. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance to Needy Families; AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.658 ? Foster Care Title IV-E ? Allowable Cost/Cost Principles Grant Number & Year: 1901NETANF, FFY 2019; 2101NEFOST, FFY 2021; 2201NEFOST, FFY 2022; 202121S251443, FFY 2021; 202222S251443, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 200.303 (January 1, 2022): The non-Federal entity must: (a) Establish and maintain effective internal control the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per the CAP, ?The RMTS Administrator is an employee of the Division of Children and Family Services and is responsible for . . . . verification that all forms are submitted to the Completed Surveys database, review of the worker entries to validate consistent practice among participants . . . .? Per the CAP, ?Each worker should be trained in the completion of the observation form and to the importance of providing accurate and timely responses.? According to RMTS Explanations: 1. Case Work ? Select this item if you were working on a specific case at the observation time. If you select this item you will be asked to enter the NFOCUS master case number. If there is not an NFOCUS master case, use any other number or description that can be used to identify the case . . . . According to the RMTS Instructions for the Worker: ?After the observation form has been submitted and validated (if selected for validation), it is reviewed by a member of the CFS and Cost Accounting Office for consistency.? According to the RMTS Instructions for the Supervisor: ?If you agree with the worker?s selections, you can click the ?VALIDATION? button. If you do not agree with the worker?s selections, you need to confer with the worker on the selection process and reach agreement on the proper selections for the form. Make updates as needed, and click the ?VALIDATION? button to attach the supervisor?s electronic signature and validate the form.? Good internal control and sound accounting practices require procedures to ensure that staff know how to complete accurate random moment time studies, which are used to allocate costs to Federal programs. Condition: The Agency did not have adequate procedures to ensure the accuracy of the RMTS. A similar finding was noted in the prior audit. Repeat Finding: 2021-033 Questioned Costs: $14,131 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The RMTS is conducted on an ongoing basis to provide data for the allocation of direct and indirect costs to various programs. The objective is to identify employee efforts directly related to programs administered by the Agency. We tested 48 validated RMTS observations and noted that inadequate documentation was provided on 11 of them. We noted the following: ? For two of four Foster Care IV-E observations tested, the observations should have been reported as Foster Care Non IV-E per the documentation in the case files. For one of these observations, the case worker noted in the comments that she selected the wrong option. However, it was still validated without correction. ? For five of 21 SNAP observations tested, the RMTS observation form appeared to have been completed incorrectly by the case worker. For two of these observations, the case worker selected the SNAP program; however, per the case files, the case worker appeared to be working on other programs along with SNAP at the time of the observation or was not working on SNAP at all at the time of the observation. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. For the other three observations, the case workers did not document which cases they were working on. ? For four of 12 TANF observations tested, the RMTS observation forms appeared to have been completed incorrectly by the case workers. The case workers selected the TANF program; however, per the case files, the case workers appeared to be working on other programs along with TANF at the time of the observation, or, for one case, not working on TANF at all. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. Total known Federal payment errors, amount tested, error rate (amount of errors/ amount tested), total dollars charged via RMTS, and potential dollars at risk (dollar rate multiplied by the population total dollars charged) are summarized below by program: See Schedule of Findings and Questioned Costs for chart/table. The APA also inquired with Agency staff to determine if they were provided training in how to complete the random moment time studies. For one individual, the Agency was unable to provide documentation to support that the employee selected had completed RMTS training. Cause: The Agency?s training of staff and supervisory reviews of RMTS observations were not sufficient to ensure the observations were accurately completed. Effect: Random moment sampling is based on the laws of probability, which state, in essence, that there is a high probability that a relatively small number of random observations will yield an accurate depiction of the overall characteristics of the population for which the sample was taken. If RMTS observations are not accurate, there is an increased risk costs will be allocated incorrectly between programs. Recommendation: We recommend the Agency improve procedures to ensure that random moment observations are accurate and adequately reviewed. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance for Needy Families (TANF) ? Reporting Grant Number & Year: Various, including 2001NETANF, FFY 2020; 2101NETANF, FFY 2021 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021), the non-Federal agency must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 265.9(a) (October 1, 2021) requires, ?Each State must file an annual report containing information on the TANF program and the State's MOE [maintenance-of-effort] program(s) for that year.? 45 CFR ? 265.9(c) details the information required to be reported for each State program for which the State claims MOE expenditures. Per 45 CFR ? 265.10, the annual report is due at the same time as the fourth quarter TANF Data Report, which is 45 days after the end of the quarter, or November 14. 2 CFR ? 170, Appendix A I. (January 1, 2022) states, in part, the following: a. Reporting of first-tier subawards. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency . . . . . . . . 2. ii. For subaward information, report no later than the end of the month following the month in which the obligation was made. . . . . e. 4. Subaward: i. This term means a legal instrument to provide support for the performance of any portion of the substantive project or program for which you received this award and that you as the recipient award to an eligible subrecipient. . . . . iii. A subaward may be provided through any legal agreement, including an agreement that you or a subrecipient considers a contract. 45 CFR ? 75.211 (October 1, 2021) states the following: (a) In accordance with statutory requirements for Federal spending transparency (e.g., FFATA), except as noted in this section, for applicable Federal awards the HHS awarding agency must announce all Federal awards publicly and publish the required information on a publicly available OMB-designated government-wide Web site (at time of publication, www.USAspending.gov). (b) All information posted in the designated integrity and performance system accessible through SAM (currently FAPIIS) on or after April 15, 2011 will be publicly available after a waiting period of 14 calendar days . . . . Good internal control requires procedures to ensure all required reports are submitted on time. Condition: The ACF204 Report for FFY 2021 was required to be submitted by November 14, 2021; however, it was not submitted until November 8, 2022, after it was requested by the auditors. FFATA reporting was not submitted for the largest TANF subrecipient. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: Federal reports were not submitted as required, as noted below. ACF204 On September 29, 2022, we requested the ACF204 report for FFY 2021. On October 20, 2022, Agency staff responded that they were unable to find the report in the system and it did not appear it was submitted. The Agency subsequently submitted the report on November 8, 2022, and provided it to the auditors, almost one year after the report was due. FFATA For fiscal year ended June 30, 2022, the Agency paid subrecipients $13,735,054, which included $9,459,670 to Equus Workforce Solutions for Employment First service coordination. We tested FFATA reporting for the three largest subrecipients. We noted that no FFATA report was submitted for Equus Workforce Solutions. We reviewed the subaward history, including renewals and amendments. The renewal was signed May 31, 2022, for $20,060,504 for fiscal year 2023, and was due for FFATA reporting by June 30, 2022, but it was not submitted. We also reviewed https://www.usaspending.gov, the public facing website that provides the reported FFATA information, and not only did the Agency fail to report the subaward renewal during our audit period, but also it never reported the subaward in effect for fiscal year ended 2022. Cause: Inadequate procedures to ensure that required reports are submitted by the reporting deadline. There was employee turnover for the ACF204 report. According to Agency staff, the subaward was considered a hybrid contract/subaward and was missed for FFATA reporting. Effect: Noncompliance with Federal requirements, which could lead to sanctions. Recommendation: We recommend the Agency implement procedures to ensure all required reports are submitted timely. We further recommend the implementation of procedures to ensure that all subawards are reported to FFATA accurately and in a timely manner. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance for Needy Families (TANF) ? Allowability & Eligibility Grant Number & Year: 2001NETANF, FFY 2020; 1901NETANF, FFY 2019 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.403 (October 1, 2021), costs must be necessary, reasonable, and adequately documented. Per Nebraska?s Combined State Plan (Program Years 2020-2023): DHHS will use TANF funds to support an array services to assist needy families with children so that children can be cared for in their own homes . . . . The eligibility criteria will be needs based as indicated by the family?s program eligibility status for Aid to Dependent Children (ADC), Supplemental Nutrition Assistance Program (SNAP), SSI or Medicaid. Medicaid eligibility will be based on parent income and not state ward status of an identified child. Per 45 CFR ? 75.302(a) (October 1, 2021): Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds. In addition, the state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR ? 75.303 (October 1, 2021), the non-Federal agency must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Good internal control requires procedures to ensure compliance with Federal regulations. Condition: Child welfare claims paid with TANF funds were not in accordance with State and Federal requirements. Repeat Finding: No Questioned Costs: $5,589 known (2001NETANF, $5,548; 1901NETANF, $41) Statistical Sample: No Context: The State Plan allows for payment of certain child welfare costs from Federal TANF funds. To identify eligible claims the Agency performs a query of the NFOCUS system to pull claims for certain services (e.g., family support services, intensive family preservations and drug testing) for families in an active TANF, SNAP, or Medicaid case or SSI. The Agency transferred $5,596,250 from State general funds to Federal TANF funds for 16,728 claims. We selected 10 claims, totaling $5,760, for testing and noted that one $2,461 claim was not allowable. There was no active TANF, SNAP, or Medicaid case or SSI for the family; therefore, per the State Plan, the family was ineligible. We reviewed the NFOCUS detail and noted 4,000 claims, totaling $1,331,698, charged to TANF identified as no active TANF, SNAP, or Medicaid case. We selected 10 of these claims, totaling $3,128, and reviewed the case eligibility information on NFOCUS. None of the 10 claims tested had an active TANF, SNAP or Medicaid case or SSI for the time of service and were, therefore, not allowable. The known questioned costs for the claims tested was $5,589 ($2,461 + $3,128). The potential dollars at risk is $1,331,698 identified as no active TANF, SNAP, or Medicaid case. Cause: Inadequate review procedures. The NFOCUS details active program cases, but the Agency failed to exclude those cases that were not active for TANF, SNAP, or Medicaid. Effect: Without adequate controls to ensure claims are paid per Federal requirements, there is an increased risk for loss or misuse of funds. Recommendation: We recommend the Agency improve procedures to ensure compliance with the Federal requirements. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance for Needy Families (TANF) ? Allowability & Eligibility Grant Number & Year: 2001NETANF, FFY 2020 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 264.1(a)(1) (October 1, 2021): Subject to the exceptions in this section, no State may use any of its Federal TANF funds to provide assistance (as defined in ? 260.31 of this chapter) to a family that includes an adult head-of-household or a spouse of the head-of-household who has received Federal assistance for a total of five years (i.e., 60 cumulative months, whether or not consecutive). Title 8 U.S.C. Section 1611(a) states that any individual receiving assistance must be a ?qualified alien? or a U.S. citizen. Title 468 NAC 2-002(2)(a) (Rev. July 8, 2014) states a qualified alien is ?An alien who was admitted as a lawful permanent resident (LPR) and has resided in the United States for at least five calendar years from the date of entry or who has worked or can be credited with 40 qualifying quarters of work.? Title 468 NAC 2-20.10A (Rev. January 9, 2017) states, ?TANF received from another state will apply towards the family?s 60-month lifetime limit.? A good internal control plan requires eligibility determinations and payments to be accurate. Condition: One of 25 TANF cash assistance payments tested was not in compliance with State and Federal requirements. Repeat Finding: No Questioned Costs: $849 known Statistical Sample: No Context: For one case tested, verification of eligibility was not documented, resulting in $182 sample questioned costs and $667 in non-sample questioned costs. There was no documentation at the time of the initial application in October 2021 to ensure the parent receiving assistance was a qualified alien. Additionally, the Agency did not verify whether the family received TANF benefits in the state in which they had previously lived. Federal questioned costs in the sample were $182. The total Federal sample tested was $9,456, and the total Federal cash assistance for the fiscal year was $13,954,157. Based on the sample tested, the case error rate was 4% (1/25). The dollar rate for the sample was 1.92% ($182/$9,456), which estimates the potential dollars at risk for fiscal year 2022 to be $267,920 (dollar error rate multiplied by population). Cause: Worker error. Effect: Increased risk that Federal funds will be paid to ineligible individuals. Recommendation: We recommend that the Agency implement procedures to ensure compliance with State and Federal regulations. Management Response: The Agency agrees.
Program: AL 93.558 ? Temporary Assistance for Needy Families (TANF) ? Reporting Grant Number & Year: 2101NETANF, FFY 2021; 2201NETANF, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.302(a) (October 1, 2021): Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR ? 75.303(a) (October 1, 2021), the non-Federal agency must: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 42 USC 611, each State must collect on a monthly basis, and report to the Secretary on a quarterly basis, case record information on the families receiving TANF assistance. 45 CFR ? 265.3(a) (October 1, 2021) states: (1) Each State must collect on a monthly basis, and file on a quarterly basis, the data specified in the TANF Data Report and the TANF Financial Report (or, as applicable, the Territorial Financial Report). (2) Each State that claims MOE expenditures for a separate State program(s) must collect on a monthly basis, and file on a quarterly basis, the data specified in the SSP-MOE Data Report. 45 CFR ? 265.7(a) (October 1, 2021) states: Each State's quarterly reports (the TANF Data Report, the TANF Financial Report (or Territorial Financial Report), and the SSP-MOE Data Report) must be complete and accurate and filed by the due date. TANF Data Report instructions state, in part: For purposes of completing this report, include all TANF eligible families receiving assistance (i.e., families funded under the TANF block grant and State MOE funded TANF families) as families receiving assistance under the State (Tribal) TANF Program. All counts of families and recipients should be unduplicated monthly totals. * * * * Instruction: Enter the number of families receiving assistance under the State (Tribal) TANF Program for each month of the quarter. A. First Month: B. Second Month: C. Third Month: Good internal control requires procedures to ensure reports are accurate, and any issues are resolved in a timely manner. Condition: The Agency was unable to provide a detail of cases to support the Section Three Total Number of Families reported and the Total Number of SSP-MOE Families. Also, issues noted during the Agency?s review were not resolved timely. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: We tested 10 Federal assistance cases reported on the ACF-199 and five State (SSP-MOE) cases reported on the ACF-209 and tested all items identified as key line items on the OMB Compliance Supplement. We also tested the total number of families reported on each report for November 2021 and April 2022. We requested the Agency to provide the detail of unduplicated families for those months. The Agency provided four Notepad text files for each month. The auditor copied the files to Excel and removed duplicate cases; however, the number of families per the Notepad files did not agree to the number of families reported. The auditor also reviewed the State?s general ledger for TANF payments and compared the number of unduplicated payees to the reports. Although some variances might be expected, the number of payees per the general ledger was 5% to 7% less than that in the 199 report and 6% to 13% less than that in the 209 report. See Schedule of Findings and Questioned Costs for chart/table. Program staff review a sample each month of three 199 reports and three 209 reports. Issues noted were sent to the Agency IT staff. One of the issues noted was that closed cases appear on the reports. This issue was noted prior to May 2021 but remained unresolved by the IT staff as of October 2022. In response to our inquiry, the IT Analyst replied on October 31, 2022, ?There are currently 2 separate pending SCR?s documented for research and various fixes to the ACF 199 / 209 reports logic . . . . Target dates for those have not been assigned.? Cause: Adequate resources were not devoted to correcting reporting errors noted. Effect: Increased risk for inaccurate reporting and non-compliance with Federal requirements. Recommendation: We recommend the Agency implement procedures to ensure reports are accurate, and any system issues are resolved in a timely manner. Management Response: The Agency agrees.
Program: Various, including AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.558 ? Temporary Assistance for Needy Families; AL 93.566 ? Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 ? Child Care and Development Block Grant ? Allowable Costs/Cost Principles Grant Number & Year: Various, including 202121S251443, FFY 2021; 202222S251443, FFY 2022; 1901NETANF, FFY 2019; 2101NERCMA, FFY 2021; 2201NERCMA, FFY 2022; 2201NECCDD, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303 (October 1, 2021) states, in relevant part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be necessary, reasonable, and adequately documented. 45 CFR ? 75.302 (October 1, 2021) requires financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 400.1 (January 1, 2022), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. 2 CFR ? 200.303 (January 1, 2022) states, in part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. 45 CFR ? 75.511(b) and 2 CFR ? 200.511(b) (January 1, 2022) state, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that amounts charged to Federal programs are proper. Condition: The Agency did not properly charge Federal programs for seven allocations tested. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-031, 2021-032 Questioned Costs: $44,356 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For seven of 14 allocations tested, we noted the following: ? We tested the allocation of cost center 25C21940 Field Office Resource Development for the quarter ended September 30, 2021, which is allocated based on Time & Effort reports. The payroll costs for 85 employees were charged to the cost center; however, four of the employees? payroll costs should not have been charged to the cost center. The four employees tested included a Federal Aid Administrator, a Program Accuracy Specialist, and two Office Specialists. The supervisors they worked with were not charged to this cost center, and the employees were not employed as Resource Developers, which was the job title of most of the employees included in this cost center. As a result of these employees being charged to the Resource Development cost center instead of their appropriate cost centers, Child Care and Development, Foster Care, Adoption Assistance, Guardianship Assistance, and Medicaid were not charged correctly, ranging from undercharges of $2,653 to overcharges of $2,402. Additionally, we were unable to determine how the payroll costs of $9,858 to the Federal Aid Administrator should have been allocated. The Resource Development cost center allocated $1,444,162 for the quarter ended September 30, 2021. A similar finding was noted in the prior audit. ? We tested the allocation of cost center 25C20680 Legal Services General Legal Teams for the quarter ended June 30, 2022, which is allocated based on Time & Effort reports. The payroll costs for a Legislative Coordinator were recorded to this cost center during the quarter. However, these costs should have been recorded to cost center 25C20720 Communications and Legislative Services Administration. As a result, this employee?s payroll costs of $15,777 during the quarter were not allocated to Federal programs correctly. We were unable to determine how these payroll costs should have been allocated. The Legal Services General Legal Teams cost center allocated $1,332,052 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21960 Field Office Social Services Casework for quarter ended September 30, 2021, which is allocated based on random moment time studies (RMTS) results. The Bridges to Independence program and Guardianship Assistance program should have been allocated $1,464 each from this cost center; however, the Agency did not include these programs in the allocation. As a result, the Federal grants for Refugee and Entrant Assistance, Child Care and Development, Foster Care, Adoption Assistance, Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Medicaid were overcharged, ranging from $3 to $982, and the Guardianship Assistance grant was undercharged $732. The Field Office Social Services Casework cost center allocated $8,099,617 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C21920 Field Office Child Protection & Safety Services for the quarter ended June 30, 2022, which is allocated based on RMTS results. The Agency began using a new RMTS system in January 2022; however, the Agency did not set up the quarterly summary reports correctly. Below are the issues noted: o RMTS observations for Trial Home Visits were not included in the allocation. As a result, State programs were undercharged, and Federal programs were overcharged. o The RMTS observations for Child Protection Initial Assessment were not properly allocated. As a result, Foster Care was overcharged, and Adoption and Guardianship were undercharged. o The RMTS observations for Before or After Work Hours were incorrectly included in the State?s allocation. As a result, Federal programs were undercharged. In total, Federal grants for Adoption Assistance, Foster Care, and Guardianship Assistance were undercharged $28,560, $113,762, and $1,990, respectively. The Field Office Child Protection & Safety Services cost center allocated $12,429,881 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21910 Field Office Administration for the quarter ended June 30, 2022, which is allocated based on labor hours. The Agency did not include all of the applicable labor hours for the Medicaid program. As a result, the Federal grants for Adoption Assistance, Foster Care, Guardianship Assistance, Refugee and Entrant Assistance, Child Care and Development, TANF, and SNAP were overcharged, ranging from $265 to $30,556, and the Medicaid grant was undercharged $235,906. The Field Office Administration cost center allocated $3,236,547 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C20990 IST Application NFOCUS Applications for the quarter ended September 30, 2021, which is allocated based on client counts per NFOCUS/MMIS reports. We noted that the Foster Care and TANF recipient counts used in the allocation did not agree to support. The Foster Care count included 71 clients that were paid with State funds, resulting in $265 being overcharged to the Foster Care grant, and the TANF count included 48 clients that were paid with State funds, resulting in $358 being overcharged to the TANF grant. Additionally, we were unable to trace the member counts to documentation that supported allocating $1,853,284 to Medicaid and $283,190 to the Children?s Health Insurance Program (CHIP). The Agency did not maintain the member count reports used at the time of the allocation. The Agency was able to generate a historical report; however, while the report amounts were similar, they did not agree with the counts used in the allocation. The Agency did maintain system summary reports at the time of the allocation, and the total counts on the summary reports did agree to amounts used for the allocation. However, as the summary reports used did not maintain the detail of members counted, we could not verify the accuracy of the reports used. The IST Application Services NFOCUS Applications cost center allocated $3,800,340 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C23823 iServe IAPD H971 ? Shared for the quarter ending June 30, 2022. The Agency is developing the new iServe Nebraska Portal, which is an application for Nebraskans to apply for benefits from Federal and State programs. This application will be replacing ACCESSNebraska, the current application used by Nebraskans to apply for benefits. For the implementation phase of the project, the Agency was only allocating costs to the following four programs: LIHEAP, TANF, SNAP, and Medicaid. However, there are other Federal and State programs that will utilize the iServe application. We asked for documentation to support that these were the only four programs that were benefiting from this stage of the project. The Agency provided correspondence from its Federal contacts, which stated: ?As long as SNAP, Medicaid, LIHEAP, and TANF are the only benefiting programs for the State?s iServe Nebraska Portal project, the State may just include these four programs in the development of its cost allocation plan. If/when the State decides to add other Federal programs that will benefit from enhancements to the portal, it will need to revisit and adjust its cost allocation plan.? We asked again for documentation, such as internal planning documents, to support that these were the only four programs benefiting from this stage of the project. The Agency replied that it did not have the documentation at this time. The iServe IAPD H971 ? Shared cost center allocated $6,019,121 for the quarter ended June 30, 2022. We were unable to determine questioned costs as we were not able to determine which Federal and State program should receive an allocation, and the basis for how the costs would be allocated to these programs. Cause: Inadequate procedures to ensure that system reports were set up correctly, employees coded their time correctly, and allocations were adequately supported and calculated correctly. Effect: Without adequate documentation to support the allocation of costs, there is increased risk of programs not being charged the proper amounts. Recommendation: We recommend the Agency improve procedures to ensure that employee pay is recorded correctly in E1, system reports are set up correctly, and costs are properly allocated and charged. Management Response: The Agency agrees.
Program: Various, including AL 84.010 ? Title I Grants to Local Educational Agencies; AL 93.568 ? Low-Income Home Energy Assistance (LIHEAP); and AL 93.659 ? Adoption Assistance ? Cash Management Grant Number & Year: Various Federal Grantor Agency: Various Criteria: 31 CFR ? 205.12 (July 1, 2021) states, in part, the following: (a) We and a State may negotiate the use of mutually agreed upon funding techniques. We may deny interest liability if a State does not use a mutually agreed upon funding technique. Funding techniques should be efficient and minimize the exchange of interest between States and Federal agencies. (b) We and a State may base our agreement on the sample funding techniques listed in paragraphs (b)(1) through (b)(5) of this section . . . . * * * * (3) Average clearance means that a Federal Program Agency, on the dollar-weighted average day of clearance of a disbursement, transfers to a State a lump sum equal to the actual amount of funds that the State is paying out. The dollar-weighted average day of clearance is the day when, on a cumulative basis, 50 percent of the funds have been paid out. The dollar-weighted average day of clearance is calculated from a clearance pattern, consistent with ?205.20. Per 31 CFR ? 205.19(e) (July 1, 2021) states, in part, the following: A State may use actual data, a clearance pattern, or statistical sampling to calculate interest. A clearance pattern used to calculate interest must meet the standards of ? 205.20. Per 31 CFR ? 205.20 (July 1, 2021): States use clearance patterns to project when funds are paid out, given a known dollar amount and a known date of disbursement. A State must ensure that clearance patterns meet the following standards: * * * * (b) A clearance pattern must accurately represent the flow of Federal funds under the Federal assistance programs to which it is applied. Per 31 CFR ? 205.22(b) (July 1, 2021): An authorized State official must certify that a clearance pattern corresponds to the clearance activity of the Federal assistance program which it is applied. An authorized State official must re-certify the accuracy of a clearance pattern at least every five years. . . . A State can begin to use a new clearance pattern on the date the new clearance pattern is certified. Condition: The Agency lacked adequate procedures to ensure that Federal funds were drawn in compliance with the Treasury Service Agreement (TSA). Repeat Finding: No Questioned Costs: N/A Statistical Sample: No Context: Twelve programs for the State use ?Average Clearance? to request Federal funds. For Average Clearance, the funds are requested so that they are deposited on the dollar-weighted average day of clearance for the disbursement. Clearance patterns are recalculated every five years. The Agency uses historical data to determine the number of days each check was outstanding (clearance time). The clearance time is multiplied by the percentage of total disbursements for those checks, and a dollar-weighted average day of clearance is determined by summing the clearance factor for each day. A clearance pattern of 3.43 days would have 57% of funds deposited on day three and 43% deposited on day four. On December 14, 2021, the Agency and the U.S. Department of the Treasury signed the TSA, establishing the Letter of Credit clearance patterns to be used for the period of July 1, 2021, through June 30, 2022. As of the date of the APA?s review in November 2022, however, the Agency had not yet updated the Delay of Draw (DOD) system to reflect these clearance patterns. Consequently, the Agency continued to draw Federal funds using the fiscal year 2021 clearance patterns, some of which were last calculated in fiscal year 2016. The APA identified three Federal programs that were drawing Federal funds at a faster rate than allowed by the TSA. ? AL 84.010 draws funds through multiple DOD #?s, including DOD #0999. DOD #0999 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.43 days for fiscal year 2022. This resulted in the early draw of 43% of AL 84.010 funds drawn through DOD #0999. ? AL 93.568 draws funds through multiple DOD #?s, including DOD #2761. DOD #2761 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.37 days for fiscal year 2022. This resulted in the early draw of 37% of AL 93.568 funds drawn through DOD #2761. ? AL 93.659 draws funds through multiple DOD #?s, none of which were properly updated from a 3-day clearance pattern to the certified clearance pattern of 4.24 days. This resulted in the early draw of AL 93.659 funds by 1.24 days. During testing of 25 Federal deposits, we noted the following: ? For one deposit tested, the Agency drew down $117,779 more in Federal funds than there were recorded as expenditures in E1, the State?s accounting system. The Agency held these funds throughout the fiscal year, continuing to do so until the APA raised concerns about them. See Schedule of Findings and Questioned Costs for chart/table. ? Due to the previously noted error in updating the DOD system, for 2 of 25 Federal draws tested, the APA noted that the Agency drew Federal funds earlier than were allowed under the TSA. As the State would have been entitled to the overdrawn funds the following day, there are no questioned costs. See Schedule of Findings and Questioned Costs for chart/table. Cause: Inadequate review of drawdowns. Agency staff stated that they had not had time to update the clearance patterns in the DOD system. Effect: Without adequate procedures to ensure that Federal drawdowns comply with the TSA, there is an increased risk of noncompliance with Federal requirements, which could lead to interest penalties and sanctions. Recommendation: We recommend the Agency strengthen its procedures for ensuring that clearance patterns are updated in a timely manner to comply with the TSA, and draws are supported by expenditures in the accounting system. Management Response: Management agrees with the finding and has updated clearance patterns to align with the most recent TSA agreement.
Program: AL 93.568 ? COVID19 ? Low-Income Home Energy Assistance (LIHEAP); AL 93.568 ? Low-Income Home Energy Assistance ? Eligibility Grant Number & Year: 2101NEE5C6, end 9/30/2022; 2201NELIEA, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 96.30(a) (October 1, 2021) states: Except where otherwise required by Federal law or regulation, a State shall obligate and expend block grant funds in accordance with the laws and procedures applicable to the obligation and expenditure of its own funds. Fiscal control and accounting procedures must be sufficient to (a) permit preparation of reports required by the statute authorizing the block grant and (b) permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of the statute authorizing the block grant. 476 NAC 2-002, ?Eligibility,? states: To qualify for the Low Income Home Energy Assistance Program, a household must: (A) Be considered an economically-vulnerable household; (B) Meet income guidelines according to household size; (C) Meet citizenship and residency requirements; and (D) Not otherwise be disqualified or ineligible. 476 NAC 1-004.6 defines ?ECONOMICALLY-VULNERABLE HOUSEHOLD? as follows: A household that is unprotected from increases in energy costs, and, therefore, must use its own resources to meet energy cost increases. 476 NAC 3-002.01, ?Provider,? states: The Department makes payment on behalf of an eligible household directly to a provider. To ensure payment, a household must provide the Department with the applicable provider name and account number. Neb. Rev. Stat. ? 68-1215 (Supp. 2021) states: For purposes of determining eligibility of a household for the low-income home energy assistance program pursuant to section 68-1201 as administered by the State of Nebraska pursuant to the federal Energy Policy Act of 2005, 42 U.S.C. 8621 to 8630, the Department of Health and Human Services shall apply a household total annual income level of one hundred fifty percent of the federal poverty level published annually by the United States Department of Health and Human Services or such successor agency which publishes the federal poverty level. Per the 2021 Poverty Guidelines (Published by the U.S. Assistant Secretary for Planning and Evaluation), the federal poverty level for a household of three individuals was $21,960. 476 NAC 2-002.01, ?Income Guidelines,? states: For purposes of calculating and treating income for Low Income Home Energy Assistance Program eligibility, the Department applies the rules and regulations from the Supplemental Nutrition Assistance Program, Title 475 Nebraska Administrative Code (NAC). 475 NAC 3-002.02(A), ?Earned Income,? states: Earned income includes all the following: (i) All gross wages and salaries of an employee including wages earned by a household member that are garnished or transferred by an employer and paid to a third party for household expenses, such as rent; 475 NAC 3-002.03(D), ?Verification of Income,? states: Before initial certification, the Department will verify gross non-excluded income. At the time of recertification, earned income will be verified again. Additionally, unearned income will be verified if the amount or the source has changed. Good internal control requires procedures to ensure that adequate documentation is maintained to support that households meet eligibility requirements and payments are issued to the proper providers. Condition: The Agency lacked adequate procedures to ensure that LIHEAP applicants met eligibility requirements prior to issuing aid payments. A similar finding was noted in the prior audit. Repeat Finding: 2021-041 Questioned Costs: $2,610 known (2101NEE5C6, $2,390; 2201NELIEA, $220) Statistical Sample: No Context: We tested 40 payments and noted the following: ? For one payment tested, the Agency did not consider all sources of income when determining household eligibility. The Agency calculated the household?s annual income to be $26,178/year; however, this did not include the income of one household member. The Agency did not verify the member?s income at the time of application; however, we observed that the individual had earnings of $16,145 during the program year. This would increase household income to $42,323/year, which is more than 150% of the Federal poverty level. We question the $300 supplemental payment tested in the sample, as well as the 2nd supplemental of $545 issued in June 2022 and the original $220 heating payment issued in November 2021. ? For another payment tested, the Agency did not verify that the household was economically vulnerable or verify the applicant?s provider account information when determining eligibility. The only provider-verified information on file was a utility bill addressed to the applicant?s personal business, which did not agree to the applicant?s home address as reported on their LIHEAP application. As such, it could not be determined that the household was economically vulnerable to energy costs or that the payment was issued to the correct provider. We question the $300 supplemental payment tested in the sample, as well as the 2nd supplemental payment of $545 issued in June 2022 and the original $700 heating payment issued in October 2021. Payment errors noted for the sample tested were $600. The total sample tested was $17,686, and total LIHEAP assistance payments for the fiscal year were $63,388,746. The dollar error rate for the sample was 3.39% ($600/$17,686), which estimates the potential dollar risk for fiscal year 2022 to be $2,148,878 (dollar rate multiplied by the population). We also noted $2,010 of questioned costs on other payments for the applicants tested. Cause: Inadequate review procedures. Effect: When Agency staff fail to properly verify household information, there is increased risk of fraud, loss of Federal funds, and noncompliance with Federal and State regulations. Recommendation: We recommend the Agency strengthen its procedures to ensure compliance with State and Federal requirements. Management Response: The Agency agrees.
Program: AL 93.568 ? Low-Income Home Energy Assistance (LIHEAP) ? Reporting Grant Number & Year: Various, including 2101NELIEA, FFY 2021 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 96.30(a) (October 1, 2021) requires ?fiscal control and accounting procedures must be sufficient to (a) permit preparation of reports required by the statute authorizing the block grant . . . .? 2 CFR 170 (January 1, 2022), Appendix A, Section I, ?Reporting Subawards and Executive Compensation,? states, in relevant part: (a) Reporting of first-tier subawards. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency . . . . . . . . (2)(ii) For subaward information, report no later than the end of the month following the month in which the obligation was made. 45 CFR 96.82(a) (October 1, 2021) states: Each grantee which is a State or an insular area which receives an annual allotment of at least $200,000 shall submit to the Department, as part of its LIHEAP grant application, the data required by section 2605(c)(1)(G) of Public Law 97?35 (42 U.S.C. 8624(c)(1)(G)) for the 12-month period corresponding to the Federal fiscal year (October 1?September 30) preceding the fiscal year for which funds are requested. The data shall be reported separately for LIHEAP heating, cooling, crisis, and weatherization assistance. 42 U.S.C 8624(c)(1)(G) requires a plan that does the following: [S]tates, with respect to the 12-month period specified by the Secretary, the number and income levels of households which apply and the number which are assisted with funds provided under this subchapter, and the number of households so assisted with ? (i) one or more members who had attained 60 years of age; (ii) one or more members who were disabled; and (iii) one or more young children; . . . . The ?Instructions for the LIHEAP Household Report for FFY 2021?Long Form? (Published October 21, 2021, by the U.S. Division of Energy Assistance) states, in part: Gross Household Income Adjusted by Household Size A household?s gross annual income and/or household size can change during the fiscal year. If a household received two benefits or services under the same type of LIHEAP assistance, use that household's gross annual income and household size at the time of the initial determination of benefits or services in calculating that household's poverty level for statistical reporting. Uniform Counting and Reporting Annual gross household incomes, adjusted by the number of household members (household size), are to be used in computing household poverty percentages, using the 2020 HHS Poverty Guidelines that were in effect at the beginning of FFY 2021 (October 1, 2020). Condition: The Agency lacked adequate procedures to ensure that required Federal Funding Accountability and Transparency Act (FFATA) reports were submitted, and Household Report information reported was complete and accurate. Repeat Finding: 2021-042 Questioned Costs: N/A Statistical Sample: No Context: During review of Federally required LIHEAP reports, we noted the following: FFATA Reporting Neither the Agency nor the Nebraska Department of Environment and Energy (NDEE), which distributes weatherization subawards, filed the required FFATA reports in a timely manner. NDEE issued multiple subawards to Nebraska community action partnerships, as well as the Habitat for Humanity ? Omaha, that exceeded the $30,000 reporting requirement, but none were reported until August 2022. The APA tested six awards and award amendments issued during the fiscal year and noted that all six awards were submitted from 61 to 303 days after they were required to be submitted. During fiscal year 2022 NDEE issued subawards totaling $6,143,036. See Schedule of Findings and Questioned costs for chart/table. The eight subrecipients during the fiscal year were paid a total of $2,866,620. Households Report In its LIHEAP Household Report for FFY2021, the Agency reported 671 applicant households for the weatherization program. This information for weatherization applicant households was provided by NDEE, which obtained the figures from its subrecipients. No documentation was provided to support the number or type of weatherization applicant households. The 671 applicants were also reported by poverty level, as shown in the table below. See Schedule of Findings and Questioned costs for chart/table. Due to the lack of data provided for the weatherization applicant households, we were unable to verify the accuracy of the applicants reported. We selected a sample of 15 households included on the FFY2021 Household Report as LIHEAP-assisted households, LIHEAP applicant households, or weatherization-assisted households. Three of 15 households tested were not properly reported or classified, as follows: ? One LIHEAP applicant household was reported at the ?Under 75% Poverty? income level. However, the household should have been reported at the ?Over 150% Poverty? income level. ? One LIHEAP applicant household was reported at the ?Under 75% Poverty? income level. However, the household should have been reported at the ?75% - 100% Poverty? income level. ? One LIHEAP applicant household was reported at the ?75% - 100% Poverty? income level. However, the household should have been reported at the ?Under 75% Poverty? income level. Cause: Inadequate review and reporting procedures. Effect: Without adequate procedures to ensure that reports contain accurate information and are submitted timely, there is an increased risk of noncompliance with Federal regulations. Recommendation: We recommend the Agency strengthen its procedures to ensure that all participants of the LIHEAP program are reflected properly in the Household Report. We also recommend the Agency review its procedures for FFATA reporting to ensure compliance with Federal requirements. Management Response: The Agency agrees.
Program: AL 93.568 ? COVID19 ? Low-Income Home Energy Assistance (LIHEAP); AL 93.568 ? Low-Income Home Energy Assistance ? Eligibility Grant Number & Year: 2101NEE5C6, end 9/30/2022; 2201NELIEA, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 96.30(a) (October 1, 2021) states: Except where otherwise required by Federal law or regulation, a State shall obligate and expend block grant funds in accordance with the laws and procedures applicable to the obligation and expenditure of its own funds. Fiscal control and accounting procedures must be sufficient to (a) permit preparation of reports required by the statute authorizing the block grant and (b) permit the tracing of funds to a level of expenditure adequate to establish that such funds have not been used in violation of the restrictions and prohibitions of the statute authorizing the block grant. 476 NAC 2-002, ?Eligibility,? states: To qualify for the Low Income Home Energy Assistance Program, a household must: (A) Be considered an economically-vulnerable household; (B) Meet income guidelines according to household size; (C) Meet citizenship and residency requirements; and (D) Not otherwise be disqualified or ineligible. 476 NAC 1-004.6 defines ?ECONOMICALLY-VULNERABLE HOUSEHOLD? as follows: A household that is unprotected from increases in energy costs, and, therefore, must use its own resources to meet energy cost increases. 476 NAC 3-002.01, ?Provider,? states: The Department makes payment on behalf of an eligible household directly to a provider. To ensure payment, a household must provide the Department with the applicable provider name and account number. Neb. Rev. Stat. ? 68-1215 (Supp. 2021) states: For purposes of determining eligibility of a household for the low-income home energy assistance program pursuant to section 68-1201 as administered by the State of Nebraska pursuant to the federal Energy Policy Act of 2005, 42 U.S.C. 8621 to 8630, the Department of Health and Human Services shall apply a household total annual income level of one hundred fifty percent of the federal poverty level published annually by the United States Department of Health and Human Services or such successor agency which publishes the federal poverty level. Per the 2021 Poverty Guidelines (Published by the U.S. Assistant Secretary for Planning and Evaluation), the federal poverty level for a household of three individuals was $21,960. 476 NAC 2-002.01, ?Income Guidelines,? states: For purposes of calculating and treating income for Low Income Home Energy Assistance Program eligibility, the Department applies the rules and regulations from the Supplemental Nutrition Assistance Program, Title 475 Nebraska Administrative Code (NAC). 475 NAC 3-002.02(A), ?Earned Income,? states: Earned income includes all the following: (i) All gross wages and salaries of an employee including wages earned by a household member that are garnished or transferred by an employer and paid to a third party for household expenses, such as rent; 475 NAC 3-002.03(D), ?Verification of Income,? states: Before initial certification, the Department will verify gross non-excluded income. At the time of recertification, earned income will be verified again. Additionally, unearned income will be verified if the amount or the source has changed. Good internal control requires procedures to ensure that adequate documentation is maintained to support that households meet eligibility requirements and payments are issued to the proper providers. Condition: The Agency lacked adequate procedures to ensure that LIHEAP applicants met eligibility requirements prior to issuing aid payments. A similar finding was noted in the prior audit. Repeat Finding: 2021-041 Questioned Costs: $2,610 known (2101NEE5C6, $2,390; 2201NELIEA, $220) Statistical Sample: No Context: We tested 40 payments and noted the following: ? For one payment tested, the Agency did not consider all sources of income when determining household eligibility. The Agency calculated the household?s annual income to be $26,178/year; however, this did not include the income of one household member. The Agency did not verify the member?s income at the time of application; however, we observed that the individual had earnings of $16,145 during the program year. This would increase household income to $42,323/year, which is more than 150% of the Federal poverty level. We question the $300 supplemental payment tested in the sample, as well as the 2nd supplemental of $545 issued in June 2022 and the original $220 heating payment issued in November 2021. ? For another payment tested, the Agency did not verify that the household was economically vulnerable or verify the applicant?s provider account information when determining eligibility. The only provider-verified information on file was a utility bill addressed to the applicant?s personal business, which did not agree to the applicant?s home address as reported on their LIHEAP application. As such, it could not be determined that the household was economically vulnerable to energy costs or that the payment was issued to the correct provider. We question the $300 supplemental payment tested in the sample, as well as the 2nd supplemental payment of $545 issued in June 2022 and the original $700 heating payment issued in October 2021. Payment errors noted for the sample tested were $600. The total sample tested was $17,686, and total LIHEAP assistance payments for the fiscal year were $63,388,746. The dollar error rate for the sample was 3.39% ($600/$17,686), which estimates the potential dollar risk for fiscal year 2022 to be $2,148,878 (dollar rate multiplied by the population). We also noted $2,010 of questioned costs on other payments for the applicants tested. Cause: Inadequate review procedures. Effect: When Agency staff fail to properly verify household information, there is increased risk of fraud, loss of Federal funds, and noncompliance with Federal and State regulations. Recommendation: We recommend the Agency strengthen its procedures to ensure compliance with State and Federal requirements. Management Response: The Agency agrees.
Program: AL 93.575 ? Child Care and Development Block Grant - Allowable Costs/Cost Principles Grant Number & Year: 2201NECCDD, FFY 2022 Federal Grantor Agency: U.S. Department of Health & Human Services Criteria: 45 CFR ? 75.403 (October 1, 2021) provides the following, in relevant part: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. * * * * (g) Be adequately documented. See also ?? 75.300 through 75.309. Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.302 (October 1, 2021) requires financial management systems of the State sufficient to permit preparation of required reports and permit the tracing of funds to expenditures adequate to establish the use of these funds were in accordance with applicable regulations. EnterpriseOne is the official accounting system for the State of Nebraska, and all expenditures are generated from it. 45 CFR ? 75.511(b) (October 1, 2021) states, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that amounts charged to Federal funds are proper. A good internal control plan also requires that Federal reports be reconciled to accounting records, and adjustments and reconciling items be resolved in a timely manner. Condition: The Agency did not have adequate procedures to ensure administrative costs charged through the Cost Allocation Plan (CAP) were properly reconciled, and adjustments to the CAP were proper. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as complete. Repeat Finding: 2021-030 Questioned Costs: $38,730 known Statistical Sample: No Context: At the end of each quarter, the Agency performs a fund mix adjustment (FMA) between State and Federal funds based upon expenditures recorded on the accounting system and how costs should be recorded according to the Agency?s cost allocation plan. We tested three journal entries to reconcile expenditures to the CAP. For one Child Care and Development Block Grant FMA tested, multiple cost centers were erroneously excluded from the calculation, resulting in the Agency improperly charging $38,730 in expenditures to Federal funds when State funds should have been used. Cause: Inadequate procedures to ensure that all cost centers are reconciled, and adjustments to the CAP are proper. Effect: Unallowable expenditures were charged to Federal funds. When costs are not reconciled accurately, there is an increased risk for errors, fraud, and non-compliance with Federal regulations. Recommendation: We recommend the Agency strengthen procedures to ensure reconciling entries are complete and accurate. We further recommend the Agency strengthen review procedures to ensure compliance with Federal regulations. Management Response: The Agency agrees.
Program: Various, including AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.558 ? Temporary Assistance for Needy Families; AL 93.566 ? Refugee and Entrant Assistance State/Replacement Designee Administered Programs; AL 93.575 ? Child Care and Development Block Grant ? Allowable Costs/Cost Principles Grant Number & Year: Various, including 202121S251443, FFY 2021; 202222S251443, FFY 2022; 1901NETANF, FFY 2019; 2101NERCMA, FFY 2021; 2201NERCMA, FFY 2022; 2201NECCDD, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303 (October 1, 2021) states, in relevant part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be necessary, reasonable, and adequately documented. 45 CFR ? 75.302 (October 1, 2021) requires financial management systems of the State sufficient to permit both preparation of required reports and tracing of funds to expenditures adequate to establish that the use of those funds was in accordance with applicable regulations. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 400.1 (January 1, 2022), the U.S. Department of Agriculture adopted the OMB Uniform Guidance as its policies and procedures for uniform administrative requirements, cost principles, and audit requirements for Federal awards. 2 CFR ? 200.303 (January 1, 2022) states, in part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. 45 CFR ? 75.511(b) and 2 CFR ? 200.511(b) (January 1, 2022) state, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that amounts charged to Federal programs are proper. Condition: The Agency did not properly charge Federal programs for seven allocations tested. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-031, 2021-032 Questioned Costs: $44,356 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For seven of 14 allocations tested, we noted the following: ? We tested the allocation of cost center 25C21940 Field Office Resource Development for the quarter ended September 30, 2021, which is allocated based on Time & Effort reports. The payroll costs for 85 employees were charged to the cost center; however, four of the employees? payroll costs should not have been charged to the cost center. The four employees tested included a Federal Aid Administrator, a Program Accuracy Specialist, and two Office Specialists. The supervisors they worked with were not charged to this cost center, and the employees were not employed as Resource Developers, which was the job title of most of the employees included in this cost center. As a result of these employees being charged to the Resource Development cost center instead of their appropriate cost centers, Child Care and Development, Foster Care, Adoption Assistance, Guardianship Assistance, and Medicaid were not charged correctly, ranging from undercharges of $2,653 to overcharges of $2,402. Additionally, we were unable to determine how the payroll costs of $9,858 to the Federal Aid Administrator should have been allocated. The Resource Development cost center allocated $1,444,162 for the quarter ended September 30, 2021. A similar finding was noted in the prior audit. ? We tested the allocation of cost center 25C20680 Legal Services General Legal Teams for the quarter ended June 30, 2022, which is allocated based on Time & Effort reports. The payroll costs for a Legislative Coordinator were recorded to this cost center during the quarter. However, these costs should have been recorded to cost center 25C20720 Communications and Legislative Services Administration. As a result, this employee?s payroll costs of $15,777 during the quarter were not allocated to Federal programs correctly. We were unable to determine how these payroll costs should have been allocated. The Legal Services General Legal Teams cost center allocated $1,332,052 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21960 Field Office Social Services Casework for quarter ended September 30, 2021, which is allocated based on random moment time studies (RMTS) results. The Bridges to Independence program and Guardianship Assistance program should have been allocated $1,464 each from this cost center; however, the Agency did not include these programs in the allocation. As a result, the Federal grants for Refugee and Entrant Assistance, Child Care and Development, Foster Care, Adoption Assistance, Temporary Assistance to Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Medicaid were overcharged, ranging from $3 to $982, and the Guardianship Assistance grant was undercharged $732. The Field Office Social Services Casework cost center allocated $8,099,617 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C21920 Field Office Child Protection & Safety Services for the quarter ended June 30, 2022, which is allocated based on RMTS results. The Agency began using a new RMTS system in January 2022; however, the Agency did not set up the quarterly summary reports correctly. Below are the issues noted: o RMTS observations for Trial Home Visits were not included in the allocation. As a result, State programs were undercharged, and Federal programs were overcharged. o The RMTS observations for Child Protection Initial Assessment were not properly allocated. As a result, Foster Care was overcharged, and Adoption and Guardianship were undercharged. o The RMTS observations for Before or After Work Hours were incorrectly included in the State?s allocation. As a result, Federal programs were undercharged. In total, Federal grants for Adoption Assistance, Foster Care, and Guardianship Assistance were undercharged $28,560, $113,762, and $1,990, respectively. The Field Office Child Protection & Safety Services cost center allocated $12,429,881 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C21910 Field Office Administration for the quarter ended June 30, 2022, which is allocated based on labor hours. The Agency did not include all of the applicable labor hours for the Medicaid program. As a result, the Federal grants for Adoption Assistance, Foster Care, Guardianship Assistance, Refugee and Entrant Assistance, Child Care and Development, TANF, and SNAP were overcharged, ranging from $265 to $30,556, and the Medicaid grant was undercharged $235,906. The Field Office Administration cost center allocated $3,236,547 for the quarter ended June 30, 2022. ? We tested the allocation of cost center 25C20990 IST Application NFOCUS Applications for the quarter ended September 30, 2021, which is allocated based on client counts per NFOCUS/MMIS reports. We noted that the Foster Care and TANF recipient counts used in the allocation did not agree to support. The Foster Care count included 71 clients that were paid with State funds, resulting in $265 being overcharged to the Foster Care grant, and the TANF count included 48 clients that were paid with State funds, resulting in $358 being overcharged to the TANF grant. Additionally, we were unable to trace the member counts to documentation that supported allocating $1,853,284 to Medicaid and $283,190 to the Children?s Health Insurance Program (CHIP). The Agency did not maintain the member count reports used at the time of the allocation. The Agency was able to generate a historical report; however, while the report amounts were similar, they did not agree with the counts used in the allocation. The Agency did maintain system summary reports at the time of the allocation, and the total counts on the summary reports did agree to amounts used for the allocation. However, as the summary reports used did not maintain the detail of members counted, we could not verify the accuracy of the reports used. The IST Application Services NFOCUS Applications cost center allocated $3,800,340 for the quarter ended September 30, 2021. ? We tested the allocation of cost center 25C23823 iServe IAPD H971 ? Shared for the quarter ending June 30, 2022. The Agency is developing the new iServe Nebraska Portal, which is an application for Nebraskans to apply for benefits from Federal and State programs. This application will be replacing ACCESSNebraska, the current application used by Nebraskans to apply for benefits. For the implementation phase of the project, the Agency was only allocating costs to the following four programs: LIHEAP, TANF, SNAP, and Medicaid. However, there are other Federal and State programs that will utilize the iServe application. We asked for documentation to support that these were the only four programs that were benefiting from this stage of the project. The Agency provided correspondence from its Federal contacts, which stated: ?As long as SNAP, Medicaid, LIHEAP, and TANF are the only benefiting programs for the State?s iServe Nebraska Portal project, the State may just include these four programs in the development of its cost allocation plan. If/when the State decides to add other Federal programs that will benefit from enhancements to the portal, it will need to revisit and adjust its cost allocation plan.? We asked again for documentation, such as internal planning documents, to support that these were the only four programs benefiting from this stage of the project. The Agency replied that it did not have the documentation at this time. The iServe IAPD H971 ? Shared cost center allocated $6,019,121 for the quarter ended June 30, 2022. We were unable to determine questioned costs as we were not able to determine which Federal and State program should receive an allocation, and the basis for how the costs would be allocated to these programs. Cause: Inadequate procedures to ensure that system reports were set up correctly, employees coded their time correctly, and allocations were adequately supported and calculated correctly. Effect: Without adequate documentation to support the allocation of costs, there is increased risk of programs not being charged the proper amounts. Recommendation: We recommend the Agency improve procedures to ensure that employee pay is recorded correctly in E1, system reports are set up correctly, and costs are properly allocated and charged. Management Response: The Agency agrees.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Allowability & Eligibility Grant Number & Year: G2101NECCDF, FFY 2021; G2101NECCDM, FFY 2021; G2201NECCDF, FFY 2022; G2201NECCDM, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 42 USC ? 9858k(b) (1992) states, ?With regard to services provided to students enrolled in grades 1 through 12, no financial assistance provided under this subchapter shall be expended for ? (1) any services provided to such students during the regular school day[.]? To be eligible for services, 45 CFR ? 98.20 (October 1, 2021) requires a child to be under 13 years of age, a citizen, and reside with a family whose income does not exceed 85% of the State?s median income. 45 CFR ? 98.55 (October 1, 2021) states: (a) Federal matching funds are available for expenditures in a State based upon the formula specified at ? 98.63(a). (b) Expenditures in a State under paragraph (a) of this section will be matched at the Federal medical assistance rate for the applicable fiscal year for allowable activities, as described in the approved State Plan, that meet the goals and purposes of the Act. 45 CFR ? 98.67(a) (October 1, 2021) states ?Lead Agencies shall expend and account for CCDF [Child Care and Development Fund] funds in accordance with their own laws and procedures for expending and accounting for their own funds.? Title 392 NAC 3-004.01(A) (Eff. 9/15/2020) states, ?The Department pays by attendance, not enrollment. Providers do not receive payment when the provider is on vacation, is ill, or is not providing care for some reason unrelated to the child or recipient.? Title 392 NAC 3-004.01(A)(i) (Eff. 9/15/2020) states, ?The provider may bill the full authorized amount for times that the child is absent on a scheduled day, up to five times per month.? Title 392 NAC 3-001.02(D) (Eff. 9/15/2020) states, ?The recipient and child care provider must ensure that the services are delivered as authorized.? Title 392 NAC 4-002. (Eff. 9/15/2020) states, in relevant part, ?Before furnishing any service, each provider must sign an enrollment form agreeing: (A) No payments will be made for child care provided to a child before the service authorization date;? and ?(G) To retain authorizations, billing documents, and attendance records for four years to support and document all claims[.]? Title 392 NAC 2-011.02 (Eff. 9/15/2020) states, in part, ?The parent of a child who is a ward of the Department or the parent of a tribal ward who attests the parent is unable to receive child care services from the tribe, is eligible for services without regard to income . . . .? Title 392 NAC 1-001 (Eff. 9/15/2020) provides the following definitions for age levels of care: 001.13 INFANT. A child age six weeks to 18 months. 001.21 PRESCHOOLER. A child age 36 months to school-age. 001.26 SCHOOL-AGED CHILD. A child who attends kindergarten or above. 001.31 TODDLER. A child age 18 months to 36 months. Neb. Rev. Stat. ? 68-1206 (Supp. 2021) provides, in part, the following: (2)(a) [T]he department shall participate in the federal child care assistance program under 42 U.S.C. 9857 et seq., . . . and provide child care assistance to families with incomes up to (i) one hundred eighty-five percent of the federal poverty level prior to October 1, 2023 . . . . (b) [I]n determining ongoing eligibility, if a family?s income exceeds one hundred eighty-five percent of the federal poverty level prior to October 1, 2023, . . . the family shall receive transitional child care assistance through the remainder of the family?s eligibility period or until the family?s income exceeds eighty-five percent of the state median income for a family of the same size as reported by the United States Bureau of the Census, whichever occurs first. . . . The amount of such child care assistance shall be based on a cost-shared plan between the recipient family and the state and shall be based on a sliding-scale methodology. A recipient family may be required to contribute a percentage of such family?s gross income for child care . . . . The Child Care Provider Handbook (Handbook), issued by the Agency in January of 2008, states, in relevant part, ?You must complete the Attendance Calendar to accurately reflect the dates on which child care services were provided as well as the exact number of hours of service provided. For each day, partial hours of service provided should be rounded up to the next quarter hour[.]? (pg. 10) The Handbooks defines ?Full Day of Care? as follows: ?Five hours and 46 minutes (6 hours) through 9 hours (9 hours and 59 minutes) unless the child care program defines its day as more than 9 hours.? (pg. 1) The Handbook also states, ?Hourly or daily units listed on the Authorization are for the total time frame of the Authorization period - less than 6 hours are hourly units - 6 hours or more are daily units[.]? (pg. 8) Good internal control requires procedures to ensure that payments are in accordance with Federal and State requirements. Condition: Child care payments did not comply with Federal and State requirements. A similar finding has been noted in our previous audit reports since 2007. Repeat Finding: 2021-043 Questioned Costs: $9,556 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: We tested 25 child care claims paid with Federal funds and 5 child care claims paid with matching general funds. We noted 11 claims with errors. Some payments had more than one type of error. ? For seven claims tested, there were discrepancies between the attendance sheet and the claim billed: o For one claim, the provider billed a day of child care when the provider was closed in observation of the July 4th holiday. o For one claim, the provider billed an absent day on a Saturday when the child did not normally attend on weekends. o For three claims, the provider billed for more hours and/or days than what was recorded on the child?s attendance sheet: ? One provider billed 36 hours and one day, while the attendance sheet showed the child attended 32 hours and one day. ? One provider billed for 12 days of care, while the attendance sheet showed only 11 days of care. ? One provider billed for 16 days when the attendance sheet showed only 15 days of care. o For two claims tested, the providers billed a full day of care when only 5.75 hours should have been billed. One provider did this for four different days on the claim. ? For two claims tested, the rate charged for child care was higher than what is allowed per the child?s age: o For one claim, the child started kindergarten in August 2021 and should have been billed at the school age rate; however, the provider was billing at the preschool rate. Child care was billed at the preschool rate through the end of the fiscal year, and the child was still authorized at a preschool rate at the time of testing in September 2022. o For one claim, the child should have been billed at a preschool rate but was billed at a toddler rate through our audit period. ? For one claim, the provider charged for a full day of care on a school day that the child would have been in school. ? For one claim, the provider billed more child care than what was authorized. A maximum of 25 hours of care were authorized per week; however, the provider billed care 5 days a week (i.e., 30+ hours/week) for the child. ? On one claim, there was a Child Support Court Order requiring child care expenses to be split 48/52 between the mother and the father of the child, respectively. Therefore, the mother should be responsible for only 48% of the child care costs, and the State should be providing subsidy assistance for only her portion of the costs (as she was the only parent applying for benefits). Instead, 100% of the remaining child care costs were being subsidized, after the family fee was applied. ? For one claim tested, the family?s income was calculated incorrectly, and the family should not have qualified for child care until March 2022, when the mother quit her job. The Agency should have calculated the mother?s monthly income as $2,728. Instead, the Agency used $0 for the mother?s income, even though she was employed by the Agency. Had the correct income been used, the family would not have been eligible for the child care subsidy program. ? One child was in Tribal Court custody and had been placed with a foster parent. There was no attest from the foster parent indicating that she could not receive child care services from the tribe. Federal payment errors noted for the sample tested were $471. The total Federal sample tested was $8,086, and total child care Federal assistance claims for the fiscal year were $37,138,666. The dollar rate for the sample was 5.82% ($471/8,086), which estimates the potential dollar risk for the fiscal year 2022 to be $2,161,470 (dollar rate multiplied by the population). In addition to the $471 Federal questioned costs noted on the sample items tested, we also noted $2,093 of Federal questioned costs on other line items of the claims reviewed and $3,317 questioned costs used to meet match, which resulted from miscalculated budgets, service authorizations exceeded, and incorrect rate charges. Unusual Claims Tested We reviewed the detail of child care claims for unusual items, such as over 300 hours billed in a month, more than 31 days billed in a month, and duplicate claims. We noted the following issues with the claims tested for the following three providers: Provider 1 This provider billed for 300 hourly units for several children during October and November 2021. The provider incorrectly billed hourly units instead of daily units, inflating the payment amount received. The Agency reviewed the provider?s attendance calendars for August 2021, September 2021, and October 2021 and established overpayments on January 22, 2022, totaling $10,595 for this incorrect billing. However, the Agency failed to identify a second provider that also billed for one of the families in October and November 2021. We reviewed the attendance calendars for both providers and identified the following issues: ? There were 336.75 hours in October and 175.5 hours in November 2021 that overlapped between the two providers. The following chart includes an example of overlapping hours billed on October 1, 2021. See Schedule of Findings and Questioned Costs for chart/table. ? Hours of care provided exceeded the service authorizations. The service authorizations covering October 2021 for both providers stated that child care was authorized up to 40 hours per week. A new service authorization issued for November 2021 authorized child care up to 45 hours per week, and hours were to be split between the primary and secondary provider. Provider 1 billed full-time for all four children during October and November 2021, with weekly hours billed ranging from 60 hours up to 126 hours. The following chart shows the total number of weekly hours each child was in care for both providers in October 2021. See Schedule of Findings and Questioned Costs for chart/table. ? The hours of care billed were not reasonable. In October 2021, the client was authorized for job search; however, hours of care began at 6:00 a.m. and ended at midnight on school days, up to 18 hours of care. The provider billed every day of the month for both October and November 2021. The provider also billed 10 hours of care on November 31, which does not exist. ? The provider did not calculate correctly the number of hours provided. For two children in November 2021, the provider billed 10 hours of care for hours from 2:00 p.m. to 11:00 p.m., which is only 9 hours. The Agency did not review the November 2021 attendance calendars, and there were two additional families for which the provider billed hourly units instead of daily units. We also noted that this provider, which is licensed for 10 children, received over $146,000 in subsidy payments during Fiscal Year 2022, as well as $46,500 in Child Care Stabilization grant funds, despite the billing issues, being placed on probation, and large overpayments. Provider 2 The same ?Provider 2? included above was paid $2,332 for 55 daily units for the period of September 16, 2021, through September 30, 2021. This is impossible, as there are only 15 days during this period. A review of the attendance calendar supported 55 hours of care. The provider should have billed 55 hours at $7 per hour or $385. Provider 3 This provider submitted two claims for the same time period for the same child and received two payments of $330 and $385.90 for those duplicate claims. Both claims included 10 days of care from January 1, 2022, through January 15, 2022. The daily rate paid for one claim was $33, and the daily rate paid for the second claim was $38.59, which is the correct daily rate as of January 1, 2022. The issues noted above accumulated to $6,992 in Federal questioned costs. We also noted $2,430 in questioned costs used to meet match funds and $6,065 in general fund questioned costs. Cause: Ineffective review. The Agency does not have automated procedures to ensure attendance records agree to billing documents, service authorizations are not exceeded, and claims are in accordance with regulations. Effect: Ineffective review of claims increases the risk for errors and misuse of State and Federal funds. Recommendation: We recommend the Agency implement procedures to ensure payments are allowable, adequately supported, and in accordance with State and Federal regulations. We further recommend the Agency ensure billing documents agree with attendance sheets. We also recommend the Agency take the necessary action to recover the overpayments. Management Response: The Agency agrees.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Special Tests and Provisions Grant Number & Year: Various, including G2201NECCDF, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 98.41 (October 1, 2021), the State must have requirements to protect the health and safety of children, including the prevention and control of infectious diseases, building and physical premises safety, and health and safety training. Per 391 NAC 3-005.09A: The Department will make a fire inspection referral when: . . . 2. Every two years following the initial fire inspection[.] Per 391 NAC 3-005.09B: The Department will make a sanitation inspection referral when: . . . 2. Every two years following the initial sanitation inspection . . . [.] A good internal control plan requires that adequate documentation be maintained to support compliance with health and safety requirements. Condition: The Agency did not have adequate procedures in place to ensure health and safety requirements were met for child care providers. A similar finding was noted in the prior audit. Repeat Finding: 2021-044 Questioned Costs: None Statistical Sample: No Context: We tested 15 child care centers subject to fire and sanitation inspections. We noted the following: The Agency received a waiver for inspections for the period March 13, 2020, to September 30, 2021; however, for eight child care centers tested, a required inspection due during the waiver period still had not been performed as of the end of fieldwork on November 1, 2022. The Agency has made timely referrals for the fire and sanitation inspections; however, the inspections are overdue, and the Agency is ultimately responsible for ensuring that these inspections are performed. See Schedule of Findings and Questioned Costs for chart/table. Cause: Depending on the city or county, the Agency relies on local fire departments or the State Fire Marshal to conduct fire inspections for child care centers. The Agency makes a referral to the fire department when an inspection is due, but the Agency does not pay for these inspections and cannot control the timing of the inspections. Effect: Without adequate procedures to ensure health and safety requirements are met, there is an increased risk of noncompliance with Federal regulations and the possibility of children being cared for in unsafe facilities. Recommendation: We recommend the Agency implement procedures to ensure all health and safety requirements are met for child care centers. These procedures should include regular follow-up with the Fire Marshal or local fire departments and local health departments or the Environmental Health Agency to ensure the inspections are completed timely. Management Response: The Agency partially agrees with the finding. It is agreed that some sanitation and fire inspections have not been conducted every 2 years. These inspections are conducted by entities external to DHHS. Resources are an issue for these entities, which contributes to not meeting the regulatory timeframes for DHHS Children's Services Licensing. The Agency disagrees with the finding, in part, because DHHS has policy and procedure for making timely referrals, as required by regulations. DHHS has had extensive documented communication and follow up with these entities after the policy and procedure changes in 2020, 2021 and 2022; however, DHHS has no authority to require these entities to complete the inspections more promptly or release completed inspections when the licensee has not paid for the fire or sanitation inspection. DHHS will continue to implement policies and procedures: File Review by Child Care Licensing Supervisors and Fire and Sanitation Inspection Referrals. It is accurate that ?per 45 CFR ? 98.41 (October 1, 2020), the State must have requirements to protect the health and safety of children, including the prevention and control of infectious diseases, building and physical premises safety, and health and safety training.? DHHS disagrees that: ?The Agency did not have adequate procedures in place to ensure health and safety requirements were met for childcare providers.? Regulations 391 NAC 1-5 include robust requirements to address a healthy and safe environment that includes: environmental services and safety, physical plant standards, communicable diseases, children excluded due to illness, medications, food safety, emergency preparedness, safety training and nutrition and food service training. Child Care Inspection Specialists conduct inspections pursuant to these regulations, checking on compliance in the areas listed above, and these inspections are conducted once or twice annually as required by statute. It is important to note that if serious fire safety and sanitation concerns are observed at any inspection that may endanger the health and safety of children in care, it is standard practice to work with the appropriate authority to request an immediate inspection. Fire and sanitation have always responded timely to these requests. This has been a long standing policy and procedure in Children's Services Licensing specific to Family Child Care Homes I and II and is part of the child care licensing regulations. 391 NAC Chapters 1-5: 1-005.08 Inspection by Other Entities 2-005.09 Inspection by Other Entities 3-005.09 Inspections by Other Entities 4-005.09 Inspections by Other Entities 5-005.09 Inspections by Other Entities APA Response: The Agency is the recipient of the Federal funds and is, therefore, ultimately responsible to ensure that fire and sanitation inspections are performed. Without such inspections, there is an increased risk of children being cared for in unsafe facilities.
Program: AL 93.575 ? Child Care and Development Block Grant ? Period of Performance Grant Number & Year: G1901NECCDF, FFY 2019; G2001NECCDF, FFY 2020 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 98.60(d) (October 1, 2021): The following obligation and liquidation provisions apply to States and Territories: (1) Discretionary Fund allotments shall be obligated in the fiscal year in which funds are awarded or in the succeeding fiscal year. Unliquidated obligations as of the end of the succeeding fiscal year shall be liquidated within one year. * * * * (5) Obligations may include subgrants or contracts that require the payment of funds to a third party (e.g., subgrantee or contractor). However, the following are not considered third party subgrantees or contractors: (i) A local office of the Lead Agency; (ii) Another entity at the same level of government as the Lead Agency; or (iii) A local office of another entity at the same level of government as the Lead Agency. According to 45 CFR ? 75.511(a) (October 1, 2021), ?The auditee is responsible for follow-up and corrective action on all audit findings. As part of this responsibility, the auditee must prepare a summary schedule of prior audit findings.? Per 45 CFR ? 75.511(b), ?The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs.? 45 CFR ? 75.511(b)(1) adds, ?When audit findings were fully corrected, the summary schedule need only list the audit findings and state that corrective action was taken.? Finally, 45 CFR ? 75.511(b)(2) provides, ?When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken.? A good internal control plan requires procedures to ensure compliance with Federal regulations. Condition: Expenditures were charged to the FFY 2019 grant and FFY 2020 grant after the period of performance. A similar finding was noted in the prior audit. The Summary Schedule of Prior Findings lists the status as complete. Repeat Finding: 2021-045 Questioned Costs: $1,752,798 known ($50,227 #G1901NECCDF; $1,702,571 #2001NECCDF) Statistical Sample: No Context: The FFY 2019 Child Care Discretionary grant must be obligated by September 30, 2020. The Agency charged $5,275,001 to the FFY 2019 grant after September 30, 2020. We tested a payment to the Nebraska State Patrol paid in August 2021. The payment tested totaled $50,227 for background checks in June 2021. As other State agencies are not considered a third party, these costs were not obligated by September 30, 2020, and are considered questioned costs of $50,227. The FFY 2020 Child Care Discretionary grant must be obligated by September 30, 2021. We noted $1,702,571 paid from October 6, 2021, through June 29, 2022, for Agency employee payroll. Cause: Ineffective control procedures. Effect: Noncompliance with Federal regulations. Recommendation: We recommend the Agency improve procedures to ensure expenditures charged are within the allowed time period. Management Response: The Agency agrees.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Special Tests and Provisions Grant Number & Year: All open, including #G2201NECCDF, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 98.60(i) (October 1, 2021), ?Lead Agencies shall recover child care payments that are the result of fraud. These payments shall be recovered from the party responsible for committing the fraud.? Per 45 CFR ? 98.68(b) (October 1,2021), ?Lead Agencies are required to . . . (1) Identify fraud or other program violations . . . . (2) Investigate and recover fraudulent payments and to impose sanctions on clients or providers in response to fraud.? A good internal control plan requires procedures to ensure that cases are reviewed, and appropriate dispositions are made in a timely manner. Condition: Three of nine Child Care Special Investigation Unit (SIU) cases tested were not investigated in a timely manner. A similar finding was noted in the prior audit. Repeat Finding: 2021-046 Questioned Costs: Unknown Statistical Sample: No Context: Three SIU Child Care cases were not worked timely, as follows: ? One case was not worked between November 2020 through November 2021, or 13 months. ? A second case was not worked from December 2020 through February 2022, or 15 months. SIU was waiting for the overpayment to be established by the Fiscal Compliance Analyst. The overpayment totaling $9,075 was established in March 2022, and on June 9, 2022, the client was found guilty of the intentional program violation and disqualified from child care for 12 months. ? A third case was not worked between April 2021 through January 2022, 10 months. On April 7, 2022, the client was found guilty of the intentional program violation and disqualified from child care for 12 months. Cause: The Agency did not devote adequate resources to ensuring that child care fraud cases were worked in a timely manner. Effect: When cases are not completed timely, there is an increased risk of fraud or misuse of Federal funds. Failure to pursue potential fraud cases adequately results in noncompliance with Federal requirements. Recommendation: We recommend the Agency implement procedures to ensure that cases referred to the SIU are reviewed timely, and appropriate dispositions are made. Management Response: The Agency partially agrees with the finding. In regard to the cases in question, DHHS disagrees that no work was completed on the identified cases during the timeframes noted. DHHS acknowledges that it could not provide documentation of the work to prove actions were being completed. We would also like to point out that in the second case, the investigations unit was at the mercy of the overpayment team to establish the overpayment to finish the case. The investigations unit has no authority to direct the timeliness of the overpayment team. APA Response: The investigations unit and the overpayment team are within the same agency, so the investigations unit should notify management if there are issues with the overpayment team.
Program: AL 93.575 ? COVID-19 Child Care and Development Block Grant ? Special Tests and Provisions Grant Number & Year: 2101NECSC6, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 98.67(a) (October 1, 2021) states, ?Lead Agencies shall expend and account for CCDF [Child Care and Development Fund] funds in accordance with their own laws and procedures for expending and accounting for their own funds.? Per CCDF-ACF-IM-2021-02, issued 5-10-2021: Determining Stabilization Subgrant Award Amounts Child care provider subgrant amounts must: (1) be based on a provider?s stated current operating expenses, including costs associated with providing or preparing to provide child care services during the pandemic, and (2) to the extent practicable, cover sufficient operating expenses to ensure continuous operations for the intended period of the subgrant. Lead agencies have wide discretion on how subgrant amounts are formulated. To stabilize the child care sector during and after the COVID-19 public health emergency, lead agencies should limit the burden and bureaucracy on child care providers and ensure subgrants are sufficient in size and duration to support continuous operation. Lead agencies have several options for determining the operating costs of providers and the grant amounts, but should take into account the true cost of providing high-quality child care, including the costs of attracting and retaining a qualified and skilled workforce and the challenges of stable operations under the changing pandemic landscape. Some examples include: * * * * Use lead agency formulas based on general cost estimates for enrollment and age of children and region of operation. Enrollment and capacity should be used to estimate cost rather than attendance. Child care providers may provide enrollment and capacity data. Lead agencies may also already have some of this data through licensing systems and can prepopulate this data as part of a provider?s application. Child care providers must still confirm the data as part of the application. Good internal control requires that documentation be maintained to support the enrollment and capacity data used to determine subsidy amounts. Good internal control also requires procedures to ensure payments are in accordance with Federal and State requirements. Condition: The Child Care Stabilization Grant payment made to 4 of 25 providers tested was incorrect. Repeat Finding: No Questioned Costs: $16,000 known Statistical Sample: No Context: Section 2202 of the American Rescue Plan Act (ARPA) of 2021 provided states Federal funding in order to stabilize the child care sector in response to the COVID-19 public health emergency (PHE). The Agency issued over $98,000,000 in subgrants to eligible child care providers during fiscal year 2022. The subgrant funds were to be made available to qualified and eligible providers regardless of whether they had previously participated in the child care subsidy program. The Agency created a grant funding formula based on factors supporting those in underserved and lower-income areas of the state. This included providing additional funding for those providers serving children from families with low incomes. The Agency?s funding formula included a base amount awarded to providers based on their licensed capacity. An additional amount was awarded for the number of subsidy children the provider billed for in June 2021. The provider received an additional $2,000 for each subsidy child billed for in June 2021. The Agency provided a funding formula spreadsheet for each provider tested, which included a total number of subsidy children billed in June 2021 to whom the $2,000 bonus was applied. We asked for documentation supporting those subsidy numbers and were provided with another spreadsheet containing subsidy data for June 2021, but those numbers did not agree to the number of subsidy spots in the funding formula spreadsheet for several providers. We reviewed the child care subsidy claims in NFOCUS and counted each child that was billed in June 2021 and compared those numbers to what was included on the supporting documentation. We identified the following: See Schedule of Findings and Questioned Costs for chart/table. Federal payment errors noted for the sample tested were $16,000. The total Federal sample tested was $1,604,300, and the total child care stabilization grant payments for the fiscal year were $98,653,900. Based on the sample tested, the case error rate was 16% (4/25). The dollar error rate for the sample was 1% ($16,000/$1,604,300), which estimates the potential dollar risk for fiscal year 2022 to be $986,539 (dollar rate multiplied by the population). Cause: Lack of adequate supporting documentation for number of child care subsidy children billed. Effect: A lack of adequate supporting documentation increases the risk of payments not being in accordance with State and Federal requirements, leading to a loss of Federal funds. Recommendation: We recommend the Agency implement procedures to ensure that payments are adequately supported and in accordance with State and Federal requirements. Management Response: The Agency agrees.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Allowability & Eligibility Grant Number & Year: G2101NECCDF, FFY 2021; G2101NECCDM, FFY 2021; G2201NECCDF, FFY 2022; G2201NECCDM, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 42 USC ? 9858k(b) (1992) states, ?With regard to services provided to students enrolled in grades 1 through 12, no financial assistance provided under this subchapter shall be expended for ? (1) any services provided to such students during the regular school day[.]? To be eligible for services, 45 CFR ? 98.20 (October 1, 2021) requires a child to be under 13 years of age, a citizen, and reside with a family whose income does not exceed 85% of the State?s median income. 45 CFR ? 98.55 (October 1, 2021) states: (a) Federal matching funds are available for expenditures in a State based upon the formula specified at ? 98.63(a). (b) Expenditures in a State under paragraph (a) of this section will be matched at the Federal medical assistance rate for the applicable fiscal year for allowable activities, as described in the approved State Plan, that meet the goals and purposes of the Act. 45 CFR ? 98.67(a) (October 1, 2021) states ?Lead Agencies shall expend and account for CCDF [Child Care and Development Fund] funds in accordance with their own laws and procedures for expending and accounting for their own funds.? Title 392 NAC 3-004.01(A) (Eff. 9/15/2020) states, ?The Department pays by attendance, not enrollment. Providers do not receive payment when the provider is on vacation, is ill, or is not providing care for some reason unrelated to the child or recipient.? Title 392 NAC 3-004.01(A)(i) (Eff. 9/15/2020) states, ?The provider may bill the full authorized amount for times that the child is absent on a scheduled day, up to five times per month.? Title 392 NAC 3-001.02(D) (Eff. 9/15/2020) states, ?The recipient and child care provider must ensure that the services are delivered as authorized.? Title 392 NAC 4-002. (Eff. 9/15/2020) states, in relevant part, ?Before furnishing any service, each provider must sign an enrollment form agreeing: (A) No payments will be made for child care provided to a child before the service authorization date;? and ?(G) To retain authorizations, billing documents, and attendance records for four years to support and document all claims[.]? Title 392 NAC 2-011.02 (Eff. 9/15/2020) states, in part, ?The parent of a child who is a ward of the Department or the parent of a tribal ward who attests the parent is unable to receive child care services from the tribe, is eligible for services without regard to income . . . .? Title 392 NAC 1-001 (Eff. 9/15/2020) provides the following definitions for age levels of care: 001.13 INFANT. A child age six weeks to 18 months. 001.21 PRESCHOOLER. A child age 36 months to school-age. 001.26 SCHOOL-AGED CHILD. A child who attends kindergarten or above. 001.31 TODDLER. A child age 18 months to 36 months. Neb. Rev. Stat. ? 68-1206 (Supp. 2021) provides, in part, the following: (2)(a) [T]he department shall participate in the federal child care assistance program under 42 U.S.C. 9857 et seq., . . . and provide child care assistance to families with incomes up to (i) one hundred eighty-five percent of the federal poverty level prior to October 1, 2023 . . . . (b) [I]n determining ongoing eligibility, if a family?s income exceeds one hundred eighty-five percent of the federal poverty level prior to October 1, 2023, . . . the family shall receive transitional child care assistance through the remainder of the family?s eligibility period or until the family?s income exceeds eighty-five percent of the state median income for a family of the same size as reported by the United States Bureau of the Census, whichever occurs first. . . . The amount of such child care assistance shall be based on a cost-shared plan between the recipient family and the state and shall be based on a sliding-scale methodology. A recipient family may be required to contribute a percentage of such family?s gross income for child care . . . . The Child Care Provider Handbook (Handbook), issued by the Agency in January of 2008, states, in relevant part, ?You must complete the Attendance Calendar to accurately reflect the dates on which child care services were provided as well as the exact number of hours of service provided. For each day, partial hours of service provided should be rounded up to the next quarter hour[.]? (pg. 10) The Handbooks defines ?Full Day of Care? as follows: ?Five hours and 46 minutes (6 hours) through 9 hours (9 hours and 59 minutes) unless the child care program defines its day as more than 9 hours.? (pg. 1) The Handbook also states, ?Hourly or daily units listed on the Authorization are for the total time frame of the Authorization period - less than 6 hours are hourly units - 6 hours or more are daily units[.]? (pg. 8) Good internal control requires procedures to ensure that payments are in accordance with Federal and State requirements. Condition: Child care payments did not comply with Federal and State requirements. A similar finding has been noted in our previous audit reports since 2007. Repeat Finding: 2021-043 Questioned Costs: $9,556 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: We tested 25 child care claims paid with Federal funds and 5 child care claims paid with matching general funds. We noted 11 claims with errors. Some payments had more than one type of error. ? For seven claims tested, there were discrepancies between the attendance sheet and the claim billed: o For one claim, the provider billed a day of child care when the provider was closed in observation of the July 4th holiday. o For one claim, the provider billed an absent day on a Saturday when the child did not normally attend on weekends. o For three claims, the provider billed for more hours and/or days than what was recorded on the child?s attendance sheet: ? One provider billed 36 hours and one day, while the attendance sheet showed the child attended 32 hours and one day. ? One provider billed for 12 days of care, while the attendance sheet showed only 11 days of care. ? One provider billed for 16 days when the attendance sheet showed only 15 days of care. o For two claims tested, the providers billed a full day of care when only 5.75 hours should have been billed. One provider did this for four different days on the claim. ? For two claims tested, the rate charged for child care was higher than what is allowed per the child?s age: o For one claim, the child started kindergarten in August 2021 and should have been billed at the school age rate; however, the provider was billing at the preschool rate. Child care was billed at the preschool rate through the end of the fiscal year, and the child was still authorized at a preschool rate at the time of testing in September 2022. o For one claim, the child should have been billed at a preschool rate but was billed at a toddler rate through our audit period. ? For one claim, the provider charged for a full day of care on a school day that the child would have been in school. ? For one claim, the provider billed more child care than what was authorized. A maximum of 25 hours of care were authorized per week; however, the provider billed care 5 days a week (i.e., 30+ hours/week) for the child. ? On one claim, there was a Child Support Court Order requiring child care expenses to be split 48/52 between the mother and the father of the child, respectively. Therefore, the mother should be responsible for only 48% of the child care costs, and the State should be providing subsidy assistance for only her portion of the costs (as she was the only parent applying for benefits). Instead, 100% of the remaining child care costs were being subsidized, after the family fee was applied. ? For one claim tested, the family?s income was calculated incorrectly, and the family should not have qualified for child care until March 2022, when the mother quit her job. The Agency should have calculated the mother?s monthly income as $2,728. Instead, the Agency used $0 for the mother?s income, even though she was employed by the Agency. Had the correct income been used, the family would not have been eligible for the child care subsidy program. ? One child was in Tribal Court custody and had been placed with a foster parent. There was no attest from the foster parent indicating that she could not receive child care services from the tribe. Federal payment errors noted for the sample tested were $471. The total Federal sample tested was $8,086, and total child care Federal assistance claims for the fiscal year were $37,138,666. The dollar rate for the sample was 5.82% ($471/8,086), which estimates the potential dollar risk for the fiscal year 2022 to be $2,161,470 (dollar rate multiplied by the population). In addition to the $471 Federal questioned costs noted on the sample items tested, we also noted $2,093 of Federal questioned costs on other line items of the claims reviewed and $3,317 questioned costs used to meet match, which resulted from miscalculated budgets, service authorizations exceeded, and incorrect rate charges. Unusual Claims Tested We reviewed the detail of child care claims for unusual items, such as over 300 hours billed in a month, more than 31 days billed in a month, and duplicate claims. We noted the following issues with the claims tested for the following three providers: Provider 1 This provider billed for 300 hourly units for several children during October and November 2021. The provider incorrectly billed hourly units instead of daily units, inflating the payment amount received. The Agency reviewed the provider?s attendance calendars for August 2021, September 2021, and October 2021 and established overpayments on January 22, 2022, totaling $10,595 for this incorrect billing. However, the Agency failed to identify a second provider that also billed for one of the families in October and November 2021. We reviewed the attendance calendars for both providers and identified the following issues: ? There were 336.75 hours in October and 175.5 hours in November 2021 that overlapped between the two providers. The following chart includes an example of overlapping hours billed on October 1, 2021. See Schedule of Findings and Questioned Costs for chart/table. ? Hours of care provided exceeded the service authorizations. The service authorizations covering October 2021 for both providers stated that child care was authorized up to 40 hours per week. A new service authorization issued for November 2021 authorized child care up to 45 hours per week, and hours were to be split between the primary and secondary provider. Provider 1 billed full-time for all four children during October and November 2021, with weekly hours billed ranging from 60 hours up to 126 hours. The following chart shows the total number of weekly hours each child was in care for both providers in October 2021. See Schedule of Findings and Questioned Costs for chart/table. ? The hours of care billed were not reasonable. In October 2021, the client was authorized for job search; however, hours of care began at 6:00 a.m. and ended at midnight on school days, up to 18 hours of care. The provider billed every day of the month for both October and November 2021. The provider also billed 10 hours of care on November 31, which does not exist. ? The provider did not calculate correctly the number of hours provided. For two children in November 2021, the provider billed 10 hours of care for hours from 2:00 p.m. to 11:00 p.m., which is only 9 hours. The Agency did not review the November 2021 attendance calendars, and there were two additional families for which the provider billed hourly units instead of daily units. We also noted that this provider, which is licensed for 10 children, received over $146,000 in subsidy payments during Fiscal Year 2022, as well as $46,500 in Child Care Stabilization grant funds, despite the billing issues, being placed on probation, and large overpayments. Provider 2 The same ?Provider 2? included above was paid $2,332 for 55 daily units for the period of September 16, 2021, through September 30, 2021. This is impossible, as there are only 15 days during this period. A review of the attendance calendar supported 55 hours of care. The provider should have billed 55 hours at $7 per hour or $385. Provider 3 This provider submitted two claims for the same time period for the same child and received two payments of $330 and $385.90 for those duplicate claims. Both claims included 10 days of care from January 1, 2022, through January 15, 2022. The daily rate paid for one claim was $33, and the daily rate paid for the second claim was $38.59, which is the correct daily rate as of January 1, 2022. The issues noted above accumulated to $6,992 in Federal questioned costs. We also noted $2,430 in questioned costs used to meet match funds and $6,065 in general fund questioned costs. Cause: Ineffective review. The Agency does not have automated procedures to ensure attendance records agree to billing documents, service authorizations are not exceeded, and claims are in accordance with regulations. Effect: Ineffective review of claims increases the risk for errors and misuse of State and Federal funds. Recommendation: We recommend the Agency implement procedures to ensure payments are allowable, adequately supported, and in accordance with State and Federal regulations. We further recommend the Agency ensure billing documents agree with attendance sheets. We also recommend the Agency take the necessary action to recover the overpayments. Management Response: The Agency agrees.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Special Tests and Provisions Grant Number & Year: Various, including G2201NECCDF, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 98.41 (October 1, 2021), the State must have requirements to protect the health and safety of children, including the prevention and control of infectious diseases, building and physical premises safety, and health and safety training. Per 391 NAC 3-005.09A: The Department will make a fire inspection referral when: . . . 2. Every two years following the initial fire inspection[.] Per 391 NAC 3-005.09B: The Department will make a sanitation inspection referral when: . . . 2. Every two years following the initial sanitation inspection . . . [.] A good internal control plan requires that adequate documentation be maintained to support compliance with health and safety requirements. Condition: The Agency did not have adequate procedures in place to ensure health and safety requirements were met for child care providers. A similar finding was noted in the prior audit. Repeat Finding: 2021-044 Questioned Costs: None Statistical Sample: No Context: We tested 15 child care centers subject to fire and sanitation inspections. We noted the following: The Agency received a waiver for inspections for the period March 13, 2020, to September 30, 2021; however, for eight child care centers tested, a required inspection due during the waiver period still had not been performed as of the end of fieldwork on November 1, 2022. The Agency has made timely referrals for the fire and sanitation inspections; however, the inspections are overdue, and the Agency is ultimately responsible for ensuring that these inspections are performed. See Schedule of Findings and Questioned Costs for chart/table. Cause: Depending on the city or county, the Agency relies on local fire departments or the State Fire Marshal to conduct fire inspections for child care centers. The Agency makes a referral to the fire department when an inspection is due, but the Agency does not pay for these inspections and cannot control the timing of the inspections. Effect: Without adequate procedures to ensure health and safety requirements are met, there is an increased risk of noncompliance with Federal regulations and the possibility of children being cared for in unsafe facilities. Recommendation: We recommend the Agency implement procedures to ensure all health and safety requirements are met for child care centers. These procedures should include regular follow-up with the Fire Marshal or local fire departments and local health departments or the Environmental Health Agency to ensure the inspections are completed timely. Management Response: The Agency partially agrees with the finding. It is agreed that some sanitation and fire inspections have not been conducted every 2 years. These inspections are conducted by entities external to DHHS. Resources are an issue for these entities, which contributes to not meeting the regulatory timeframes for DHHS Children's Services Licensing. The Agency disagrees with the finding, in part, because DHHS has policy and procedure for making timely referrals, as required by regulations. DHHS has had extensive documented communication and follow up with these entities after the policy and procedure changes in 2020, 2021 and 2022; however, DHHS has no authority to require these entities to complete the inspections more promptly or release completed inspections when the licensee has not paid for the fire or sanitation inspection. DHHS will continue to implement policies and procedures: File Review by Child Care Licensing Supervisors and Fire and Sanitation Inspection Referrals. It is accurate that ?per 45 CFR ? 98.41 (October 1, 2020), the State must have requirements to protect the health and safety of children, including the prevention and control of infectious diseases, building and physical premises safety, and health and safety training.? DHHS disagrees that: ?The Agency did not have adequate procedures in place to ensure health and safety requirements were met for childcare providers.? Regulations 391 NAC 1-5 include robust requirements to address a healthy and safe environment that includes: environmental services and safety, physical plant standards, communicable diseases, children excluded due to illness, medications, food safety, emergency preparedness, safety training and nutrition and food service training. Child Care Inspection Specialists conduct inspections pursuant to these regulations, checking on compliance in the areas listed above, and these inspections are conducted once or twice annually as required by statute. It is important to note that if serious fire safety and sanitation concerns are observed at any inspection that may endanger the health and safety of children in care, it is standard practice to work with the appropriate authority to request an immediate inspection. Fire and sanitation have always responded timely to these requests. This has been a long standing policy and procedure in Children's Services Licensing specific to Family Child Care Homes I and II and is part of the child care licensing regulations. 391 NAC Chapters 1-5: 1-005.08 Inspection by Other Entities 2-005.09 Inspection by Other Entities 3-005.09 Inspections by Other Entities 4-005.09 Inspections by Other Entities 5-005.09 Inspections by Other Entities APA Response: The Agency is the recipient of the Federal funds and is, therefore, ultimately responsible to ensure that fire and sanitation inspections are performed. Without such inspections, there is an increased risk of children being cared for in unsafe facilities.
Program: AL 93.575 and 93.596 ? CCDF Cluster ? Special Tests and Provisions Grant Number & Year: All open, including #G2201NECCDF, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 98.60(i) (October 1, 2021), ?Lead Agencies shall recover child care payments that are the result of fraud. These payments shall be recovered from the party responsible for committing the fraud.? Per 45 CFR ? 98.68(b) (October 1,2021), ?Lead Agencies are required to . . . (1) Identify fraud or other program violations . . . . (2) Investigate and recover fraudulent payments and to impose sanctions on clients or providers in response to fraud.? A good internal control plan requires procedures to ensure that cases are reviewed, and appropriate dispositions are made in a timely manner. Condition: Three of nine Child Care Special Investigation Unit (SIU) cases tested were not investigated in a timely manner. A similar finding was noted in the prior audit. Repeat Finding: 2021-046 Questioned Costs: Unknown Statistical Sample: No Context: Three SIU Child Care cases were not worked timely, as follows: ? One case was not worked between November 2020 through November 2021, or 13 months. ? A second case was not worked from December 2020 through February 2022, or 15 months. SIU was waiting for the overpayment to be established by the Fiscal Compliance Analyst. The overpayment totaling $9,075 was established in March 2022, and on June 9, 2022, the client was found guilty of the intentional program violation and disqualified from child care for 12 months. ? A third case was not worked between April 2021 through January 2022, 10 months. On April 7, 2022, the client was found guilty of the intentional program violation and disqualified from child care for 12 months. Cause: The Agency did not devote adequate resources to ensuring that child care fraud cases were worked in a timely manner. Effect: When cases are not completed timely, there is an increased risk of fraud or misuse of Federal funds. Failure to pursue potential fraud cases adequately results in noncompliance with Federal requirements. Recommendation: We recommend the Agency implement procedures to ensure that cases referred to the SIU are reviewed timely, and appropriate dispositions are made. Management Response: The Agency partially agrees with the finding. In regard to the cases in question, DHHS disagrees that no work was completed on the identified cases during the timeframes noted. DHHS acknowledges that it could not provide documentation of the work to prove actions were being completed. We would also like to point out that in the second case, the investigations unit was at the mercy of the overpayment team to establish the overpayment to finish the case. The investigations unit has no authority to direct the timeliness of the overpayment team. APA Response: The investigations unit and the overpayment team are within the same agency, so the investigations unit should notify management if there are issues with the overpayment team.
Program: AL 93.558 ? Temporary Assistance to Needy Families; AL 10.561 ? State Administrative Matching Grants for the Supplemental Nutrition Assistance Program; AL 93.658 ? Foster Care Title IV-E ? Allowable Cost/Cost Principles Grant Number & Year: 1901NETANF, FFY 2019; 2101NEFOST, FFY 2021; 2201NEFOST, FFY 2022; 202121S251443, FFY 2021; 202222S251443, FFY 2022 Federal Grantor Agency: U.S. Department of Agriculture and U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 45 CFR ? 75.403 (October 1, 2021) requires costs to be reasonable, necessary, and adequately documented. 45 CFR ? 75.405(a) (October 1, 2021) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per 2 CFR ? 200.303 (January 1, 2022): The non-Federal entity must: (a) Establish and maintain effective internal control the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. 2 CFR ? 200.405(a) (January 1, 2022) states, in part, the following: A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received. Per the CAP, ?The RMTS Administrator is an employee of the Division of Children and Family Services and is responsible for . . . . verification that all forms are submitted to the Completed Surveys database, review of the worker entries to validate consistent practice among participants . . . .? Per the CAP, ?Each worker should be trained in the completion of the observation form and to the importance of providing accurate and timely responses.? According to RMTS Explanations: 1. Case Work ? Select this item if you were working on a specific case at the observation time. If you select this item you will be asked to enter the NFOCUS master case number. If there is not an NFOCUS master case, use any other number or description that can be used to identify the case . . . . According to the RMTS Instructions for the Worker: ?After the observation form has been submitted and validated (if selected for validation), it is reviewed by a member of the CFS and Cost Accounting Office for consistency.? According to the RMTS Instructions for the Supervisor: ?If you agree with the worker?s selections, you can click the ?VALIDATION? button. If you do not agree with the worker?s selections, you need to confer with the worker on the selection process and reach agreement on the proper selections for the form. Make updates as needed, and click the ?VALIDATION? button to attach the supervisor?s electronic signature and validate the form.? Good internal control and sound accounting practices require procedures to ensure that staff know how to complete accurate random moment time studies, which are used to allocate costs to Federal programs. Condition: The Agency did not have adequate procedures to ensure the accuracy of the RMTS. A similar finding was noted in the prior audit. Repeat Finding: 2021-033 Questioned Costs: $14,131 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The RMTS is conducted on an ongoing basis to provide data for the allocation of direct and indirect costs to various programs. The objective is to identify employee efforts directly related to programs administered by the Agency. We tested 48 validated RMTS observations and noted that inadequate documentation was provided on 11 of them. We noted the following: ? For two of four Foster Care IV-E observations tested, the observations should have been reported as Foster Care Non IV-E per the documentation in the case files. For one of these observations, the case worker noted in the comments that she selected the wrong option. However, it was still validated without correction. ? For five of 21 SNAP observations tested, the RMTS observation form appeared to have been completed incorrectly by the case worker. For two of these observations, the case worker selected the SNAP program; however, per the case files, the case worker appeared to be working on other programs along with SNAP at the time of the observation or was not working on SNAP at all at the time of the observation. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. For the other three observations, the case workers did not document which cases they were working on. ? For four of 12 TANF observations tested, the RMTS observation forms appeared to have been completed incorrectly by the case workers. The case workers selected the TANF program; however, per the case files, the case workers appeared to be working on other programs along with TANF at the time of the observation, or, for one case, not working on TANF at all. As we could not confirm from the documentation on file what the case worker was working on, the questioned costs are unknown. Total known Federal payment errors, amount tested, error rate (amount of errors/ amount tested), total dollars charged via RMTS, and potential dollars at risk (dollar rate multiplied by the population total dollars charged) are summarized below by program: See Schedule of Findings and Questioned Costs for chart/table. The APA also inquired with Agency staff to determine if they were provided training in how to complete the random moment time studies. For one individual, the Agency was unable to provide documentation to support that the employee selected had completed RMTS training. Cause: The Agency?s training of staff and supervisory reviews of RMTS observations were not sufficient to ensure the observations were accurately completed. Effect: Random moment sampling is based on the laws of probability, which state, in essence, that there is a high probability that a relatively small number of random observations will yield an accurate depiction of the overall characteristics of the population for which the sample was taken. If RMTS observations are not accurate, there is an increased risk costs will be allocated incorrectly between programs. Recommendation: We recommend the Agency improve procedures to ensure that random moment observations are accurate and adequately reviewed. Management Response: The Agency agrees.
Program: Various, including AL 84.010 ? Title I Grants to Local Educational Agencies; AL 93.568 ? Low-Income Home Energy Assistance (LIHEAP); and AL 93.659 ? Adoption Assistance ? Cash Management Grant Number & Year: Various Federal Grantor Agency: Various Criteria: 31 CFR ? 205.12 (July 1, 2021) states, in part, the following: (a) We and a State may negotiate the use of mutually agreed upon funding techniques. We may deny interest liability if a State does not use a mutually agreed upon funding technique. Funding techniques should be efficient and minimize the exchange of interest between States and Federal agencies. (b) We and a State may base our agreement on the sample funding techniques listed in paragraphs (b)(1) through (b)(5) of this section . . . . * * * * (3) Average clearance means that a Federal Program Agency, on the dollar-weighted average day of clearance of a disbursement, transfers to a State a lump sum equal to the actual amount of funds that the State is paying out. The dollar-weighted average day of clearance is the day when, on a cumulative basis, 50 percent of the funds have been paid out. The dollar-weighted average day of clearance is calculated from a clearance pattern, consistent with ?205.20. Per 31 CFR ? 205.19(e) (July 1, 2021) states, in part, the following: A State may use actual data, a clearance pattern, or statistical sampling to calculate interest. A clearance pattern used to calculate interest must meet the standards of ? 205.20. Per 31 CFR ? 205.20 (July 1, 2021): States use clearance patterns to project when funds are paid out, given a known dollar amount and a known date of disbursement. A State must ensure that clearance patterns meet the following standards: * * * * (b) A clearance pattern must accurately represent the flow of Federal funds under the Federal assistance programs to which it is applied. Per 31 CFR ? 205.22(b) (July 1, 2021): An authorized State official must certify that a clearance pattern corresponds to the clearance activity of the Federal assistance program which it is applied. An authorized State official must re-certify the accuracy of a clearance pattern at least every five years. . . . A State can begin to use a new clearance pattern on the date the new clearance pattern is certified. Condition: The Agency lacked adequate procedures to ensure that Federal funds were drawn in compliance with the Treasury Service Agreement (TSA). Repeat Finding: No Questioned Costs: N/A Statistical Sample: No Context: Twelve programs for the State use ?Average Clearance? to request Federal funds. For Average Clearance, the funds are requested so that they are deposited on the dollar-weighted average day of clearance for the disbursement. Clearance patterns are recalculated every five years. The Agency uses historical data to determine the number of days each check was outstanding (clearance time). The clearance time is multiplied by the percentage of total disbursements for those checks, and a dollar-weighted average day of clearance is determined by summing the clearance factor for each day. A clearance pattern of 3.43 days would have 57% of funds deposited on day three and 43% deposited on day four. On December 14, 2021, the Agency and the U.S. Department of the Treasury signed the TSA, establishing the Letter of Credit clearance patterns to be used for the period of July 1, 2021, through June 30, 2022. As of the date of the APA?s review in November 2022, however, the Agency had not yet updated the Delay of Draw (DOD) system to reflect these clearance patterns. Consequently, the Agency continued to draw Federal funds using the fiscal year 2021 clearance patterns, some of which were last calculated in fiscal year 2016. The APA identified three Federal programs that were drawing Federal funds at a faster rate than allowed by the TSA. ? AL 84.010 draws funds through multiple DOD #?s, including DOD #0999. DOD #0999 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.43 days for fiscal year 2022. This resulted in the early draw of 43% of AL 84.010 funds drawn through DOD #0999. ? AL 93.568 draws funds through multiple DOD #?s, including DOD #2761. DOD #2761 was not properly updated from a 3-day clearance pattern to the certified clearance pattern of 3.37 days for fiscal year 2022. This resulted in the early draw of 37% of AL 93.568 funds drawn through DOD #2761. ? AL 93.659 draws funds through multiple DOD #?s, none of which were properly updated from a 3-day clearance pattern to the certified clearance pattern of 4.24 days. This resulted in the early draw of AL 93.659 funds by 1.24 days. During testing of 25 Federal deposits, we noted the following: ? For one deposit tested, the Agency drew down $117,779 more in Federal funds than there were recorded as expenditures in E1, the State?s accounting system. The Agency held these funds throughout the fiscal year, continuing to do so until the APA raised concerns about them. See Schedule of Findings and Questioned Costs for chart/table. ? Due to the previously noted error in updating the DOD system, for 2 of 25 Federal draws tested, the APA noted that the Agency drew Federal funds earlier than were allowed under the TSA. As the State would have been entitled to the overdrawn funds the following day, there are no questioned costs. See Schedule of Findings and Questioned Costs for chart/table. Cause: Inadequate review of drawdowns. Agency staff stated that they had not had time to update the clearance patterns in the DOD system. Effect: Without adequate procedures to ensure that Federal drawdowns comply with the TSA, there is an increased risk of noncompliance with Federal requirements, which could lead to interest penalties and sanctions. Recommendation: We recommend the Agency strengthen its procedures for ensuring that clearance patterns are updated in a timely manner to comply with the TSA, and draws are supported by expenditures in the accounting system. Management Response: Management agrees with the finding and has updated clearance patterns to align with the most recent TSA agreement.
Program: Various, including AL 93.767 ? Children's Health Insurance Program, AL 93.778 ? Medical Assistance Program ? Reporting Grant Number & Year: Various, including #2105NE5021, FFY 2021; #2105NE5ADM, FFY 2021 Federal Grantor Agency: Various, including U.S. Department of Health and Human Services Criteria: A good internal control plan requires adequate procedures to ensure the Schedule of Expenditures of Federal Awards (SEFA) is properly presented. Title 45 CFR ? 75.510(b) (October 1, 2021) and Title 2 CFR ? 200.510(b) (January 1, 2022) state, in part, the following: The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended . . . . At a minimum, the schedule must: * * * * (3) Provide total Federal awards expended for each individual Federal program . . . (4) Include the total amount provided to subrecipients from each Federal program. Neb. Rev. Stat. ? 81-1111(1) (Reissue 2014) states, in part, the following: Subject to the supervision of the Director of Administrative Services, the Accounting Administrator shall have the authority to prescribe the system of accounts and accounting to be maintained by the state and its departments and agencies, develop necessary accounting policies and procedures, coordinate and approve all proposed financial systems, and manage all accounting matters of the state's central system. EnterpriseOne (E1) is the official accounting system of the State. Condition: Several programs did not have expenditures or the amount provided to subrecipients accurately reported on the SEFA. We notified Administrative Services of the errors, and the SEFA was subsequently adjusted. A similar finding was noted in the prior audit. Repeat Finding: 2021-025 Questioned Costs: None Statistical Sample: No Context: Administrative Services is responsible for managing the accounting matters of the State and certifies the data collection form for the Statewide Single Audit. Administrative Services compiles the SEFA from information obtained from the individual agencies, which is then submitted to the APA. During our review, we noted the following: The Department of Health and Human Services (DHHS) did not accurately report expenditures for several programs, including underreporting AL 93.767 by $16,394,237 and overreporting AL 93.778 by $13,908,580. The Department of Military underreported AL 97.036 by $41,491,068. The Department of Labor overreported AL 17.225 by $5,286,008. Several agencies did not properly identify COVID-19 expenditures. Twenty-seven programs for various State agencies needed correction. The total expenditures and amounts provided to subrecipients originally reported and per the final SEFA were as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: Administrative Services lacked adequate procedures for ensuring the accuracy of amounts not obtained directly from the accounting system. Administrative Services established a specific account code for aid to subrecipients, but not all agencies utilized this code. Effect: Increased risk for the SEFA to be inaccurate, which could lead to Federal sanctions or programs not being audited that should be. Recommendation: We recommend Administrative Services improve procedures to ensure the SEFA is complete and accurate. Management Response: We will continue to work with State teammates to ensure the SEFA is accurate and complete. The original total SEFA expenditures were 99.3% accurate.
Program: AL 93.778 ? Medical Assistance Program; AL 93.767 ? Children?s Health Insurance Program (CHIP) ? Special Tests and Provisions Grant Number & Year: All open, including #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per Title 42 CFR ? 455.104(b)(4) (October 1, 2021), the State Medicaid Agency must require the disclosing entity to provide the following disclosures: The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). Per 42 ? CFR 455.101 (October 1, 2021): Managing employee means a general manager, business manager, administrator, director, or other individual who exercises operational or managerial control over, or who directly or indirectly conducts the day-to-day operation of an institution, organization, or agency. Per the Medicaid Provider Enrollment Compendium (MPEC) (3/22/21), Section 1.4.1C: There are not exceptions to the managing employee disclosure requirement. To the extent any individual meets the definition of ?managing employee? under ?455.101, their information is required to be disclosed. Section 1.4.1C of the MPEC also contains the following: d. Non-Profit Entities Non-profit entities generally do not have owners unless state law permits such ownership. However, if a non-profit entity has managing employees, to the extent these individuals meet the definition of ?managing employee? under ? 455.101; they would have to be disclosed as such. In addition, as discussed further below, entities, including non-profit entities, that are organized as corporations must provide disclosures regarding their officers and directors. e. Government-Owned Entities There is not an exception for government-owned entities. Government-owned entities likewise need to disclose anyone meeting the definition of ?managing employee,? and would only need to disclose board members if the entity was organized as a corporation or if that individual meets the definition of ?managing employee.? See 1.4.C.1.d ?Managing Employee Disclosure.? Per 42 CFR ? 455.436 (October 1, 2021), the State Medicaid Agency must do the following: (a) Confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. (b) Check the Social Security Administration?s Death Master File, the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. (c)(1) Consult appropriate databases to confirm identity upon enrollment and reenrollment; and (2) Check the LEIE and EPLS no less frequently than monthly. 45 CFR ? 75.303 (October 1, 2021) requires the Agency to ?[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? 45 CFR ? 75.511(b) (October 1, 2021) states, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that all required disclosures are provided. Condition: Three of 25 providers tested did not include disclosure requirements for managing employees. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-051 Questioned Costs: Unknown Statistical Sample: No Context: We tested screening and enrollment for 25 Medicaid/CHIP providers. We noted that three providers, a public school, a non-profit corporation, and a for-profit corporation, failed to disclose any managing employee. Therefore, no screenings for managing employees were performed for these three providers. Cause: The Agency relies on each provider?s disclosure to be complete, true, and accurate. The provider is allowed to complete the enrollment process even if an owner or managing employee is not disclosed. Effect: Without adequate procedures to ensure providers are screened, and disclosures are complete, there is an increased risk of provider ineligibility, which could result in unallowable costs or potential harm to patients. Recommendation: We recommend the Agency obtain disclosures and screen providers as required by Federal regulations. Management Response: The Agency partially agrees with the finding. The federal regulations and MPEC require that the SMA obtain the disclosure of managing employees, that providers disclose the information, and that the SMA screen the information that is disclosed. The federal law and MPEC do not mandate that a provider must have at least one managing employee. When enrolling and revalidating their agreements, providers are directed to disclose owners and managing employees. If they fail to enter managing employee information and attempt to submit their agreement, they are directed to verify their entry and correct before submitting. It is up to the provider to determine if they have managing employees and disclose them. If the Department learns that a provider has managing employees that have not been disclosed, the provider will be directed to update their provider agreement or face sanctions. APA Response: It is not sufficient for the Agency to rely on the provider?s disclosures. Obvious errors and omissions should be reviewed to ensure compliance with Federal regulations.
Program: Various, including AL 93.778 ? Medical Assistance Program ? Allowable Costs/Cost Principles Grant Number & Year: Various, including #2105NE5ADM, FFY 2021 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 2 CFR ? 200.403 (January 1, 2022) and 45 CFR ? 75.403 (October 1, 2021) state, in relevant part, the following: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: * * * * (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. * * * * (g) Be adequately documented. 2 CFR ? 200.405(b) (January 1, 2022) and 45 CFR ? 75.405(b) (October 1, 2021) state, in relevant part, the following: All activities which benefit from the non-Federal entity?s indirect (F&A) cost, including unallowable activities and donated services by the non-Federal entity or third parties, will receive an appropriate allocation of indirect costs. 2 CFR ? 200.444(a) (January 1, 2022) and 45 CFR ? 75.444(a) (October 1, 2021) state, in relevant part, the following: For states, local governments, and Indian Tribes, the general costs of government are unallowable ?.Unallowable costs include: (1) Salaries and expenses of the Office of the Governor of a state . . . [.] (2) Salaries and other expenses of a state legislature . . . [.] 2 CFR ? 200, Appendix V, subsection (G)(2), (January 1, 2022) and 45 CFR ? 75, Appendix V, subsection (G)(2), (October 1, 2021) state the following: Internal service funds are dependent upon a reasonable level of working capital reserve to operate from one billing cycle to the next. Charges by an internal service activity to provide for the establishment and maintenance of a reasonable level of working capital reserve, in addition to the full recovery of costs, are allowable. A working capital reserve as part of retained earnings of up to 60 calendar days cash expenses for normal operating purposes is considered reasonable. A working capital reserve exceeding 60 calendar days may be approved by the cognizant agency for indirect costs in exceptional cases. 2 CFR ? 200, Appendix V, subsection (G)(4), (January 1, 2022) and 45 CFR ? 75, Appendix V, subsection (G)(4), (October 1, 2021) state, in relevant part, the following: Billing rates used to charge Federal awards must be based on the estimated costs of providing the services, including an estimate of the allocable central service costs. A comparison of the revenue generated by each billed service (including total revenues whether or not billed or collected) to the actual allowable costs of the service will be made at least annually and an adjustment will be made for the difference between the revenue and the allowable costs. These adjustments will be made through one of the following adjustment methods: (a) a cash refund including earned or imputed interest from the date of transfer and debt interest, if applicable, chargeable in accordance with applicable Federal cognizant agency for indirect costs regulations to the Federal Government for the Federal share of the adjustment, (b) credits to the amounts charged to the individual programs, (c) adjustments to future billing rates, or (d) adjustments to allocated central service costs. A good internal control plan requires: ? Procedures to ensure rate charges are equitable, reflect actual costs incurred, and are reviewed periodically to ensure such charges are appropriate for the services provided. ? Maintenance of adequate documentation to support both rates charged and the approval of those rates. ? Periodic review of internal service fund balances to ensure revenues are not in excess of expenses. ? Internal service rates that are published and available for State agency review and applied consistently for all State agencies. Condition: The Agency did not have adequate documentation to support the allocation of security costs in developing building rental rates. Additionally, the Agency?s Material Division did not maintain adequate documentation to support that charges were reasonable, equitable, and consistently applied. A similar finding was noted in prior audits since 2015. Lastly, the Accounting Internal Service Fund balance was greater than 60 calendar days for cash expenses for normal operations incurred. A similar finding was noted in the prior audit. Repeat Finding: 2021-024 Questioned Costs: Unknown Statistical Sample: No Context: We noted the following: Building Division The rental rate charged to agencies for building space includes an allocation for indirect costs for administration, grounds keeping, security, and energy management. We noted that neither the State Capitol nor the Governor?s residence were allocated any costs for security, even though there is security at both locations. Because these locations were not allocated any security costs, Federal programs could be overcharged. Additionally, security costs to the State Capitol and the Governor?s residence are general costs of government and, therefore, not allowable. The fiscal year 2022 indirect allocations for security totaled $884,797. Material Division We tested three Print Shop billings and noted the following: ? In prior audits, we noted that 24 Print Shop rates were based on calculations from fiscal year 2008, and 3 other Print Shop rates were based on calculations from fiscal year 2011. The Print Shop increased all the rates by 10% in fiscal year 2019, then increased the rates by an additional 5% in fiscal year 2020. In 2022, the rates were decreased by 5%. No support was provided to show that the current rates are reasonable. ? The Agency?s published markup price for special purchases, paper costs, plate material, special order supplies, and colored ink was 35%. The Agency did not have adequate documentation to support the reasonableness of the markup percentage rate. Receipts from sales of print shop services during the fiscal year ended June 30, 2022, totaled $2,835,540. Accounting Division Per the Agency?s calculation, as of June 30, 2021, the Accounting Services Internal Service Fund Balance for allowable costs was $4.528 million; however, the allowable reserve was only $1.007 million, a difference of $3.521 million, more than triple the allowable reserve. The Agency has not completed its calculation for June 30, 2022. The Auditor of Public Accounts (APA) estimate of the fund balance, per review of the accounting system, as of June 30, 2022, was $4.388 million, and the APA estimate of the allowable reserve was $1.007 million, a difference of $3.381 million. Therefore, the Agency appears to be charging too much for services. Cause: Inadequate procedures. Effect: When security costs are not allocated to all buildings in an equitable manner, Federal programs will not be charged in accordance with Federal cost principles. Additionally, without adequate controls and procedures to ensure rates are equitable and based on actual costs, there is an increased risk that Federal programs will be overcharged for services, and the Agency?s internal service funds will exceed the allowable threshold per Federal regulations. Recommendation: We recommend the Agency review its allocation of security costs to ensure that such costs are allocated in an equitable manner to all activities that benefit from the services. Additionally, we recommend the Agency maintain adequate documentation to support charges and ensure rates are equitable and reflect the actual costs incurred for services. Lastly, we recommend the Agency implement procedures to ensure fund balances do not exceed the allowable threshold. Management Response: The Building and Grounds security allocation is based on a management business decision. The Print Shop lacked the data needed to substantiate current rates at the individual service line level. In response to the prior year finding, the Print Shop purchased a Cost Rate Advisor license to support future rate setting methodology at the individual service line level. The Print Shop expects to finalize its analysis by July 2023. State Accounting Rates were reduced by $450,000 in fiscal year 2021, and from that level reduced another $132,000 in fiscal year?s 2022 and 2023 (current biennium). Further offsets of $700,000 are planned for each year of the coming biennium, and planned expenditures will exceed billed revenues by $1.7 million to bring the cash balance to within a 60-day operating level by June 2025.
Program: Various, including AL 93.767 ? Children's Health Insurance Program, AL 93.778 ? Medical Assistance Program ? Reporting Grant Number & Year: Various, including #2105NE5021, FFY 2021; #2105NE5ADM, FFY 2021 Federal Grantor Agency: Various, including U.S. Department of Health and Human Services Criteria: A good internal control plan requires adequate procedures to ensure the Schedule of Expenditures of Federal Awards (SEFA) is properly presented. Title 45 CFR ? 75.510(b) (October 1, 2021) and Title 2 CFR ? 200.510(b) (January 1, 2022) state, in part, the following: The auditee must also prepare a schedule of expenditures of Federal awards for the period covered by the auditee's financial statements which must include the total Federal awards expended . . . . At a minimum, the schedule must: * * * * (3) Provide total Federal awards expended for each individual Federal program . . . (4) Include the total amount provided to subrecipients from each Federal program. Neb. Rev. Stat. ? 81-1111(1) (Reissue 2014) states, in part, the following: Subject to the supervision of the Director of Administrative Services, the Accounting Administrator shall have the authority to prescribe the system of accounts and accounting to be maintained by the state and its departments and agencies, develop necessary accounting policies and procedures, coordinate and approve all proposed financial systems, and manage all accounting matters of the state's central system. EnterpriseOne (E1) is the official accounting system of the State. Condition: Several programs did not have expenditures or the amount provided to subrecipients accurately reported on the SEFA. We notified Administrative Services of the errors, and the SEFA was subsequently adjusted. A similar finding was noted in the prior audit. Repeat Finding: 2021-025 Questioned Costs: None Statistical Sample: No Context: Administrative Services is responsible for managing the accounting matters of the State and certifies the data collection form for the Statewide Single Audit. Administrative Services compiles the SEFA from information obtained from the individual agencies, which is then submitted to the APA. During our review, we noted the following: The Department of Health and Human Services (DHHS) did not accurately report expenditures for several programs, including underreporting AL 93.767 by $16,394,237 and overreporting AL 93.778 by $13,908,580. The Department of Military underreported AL 97.036 by $41,491,068. The Department of Labor overreported AL 17.225 by $5,286,008. Several agencies did not properly identify COVID-19 expenditures. Twenty-seven programs for various State agencies needed correction. The total expenditures and amounts provided to subrecipients originally reported and per the final SEFA were as follows: See Schedule of Findings and Questioned Costs for chart/table. Cause: Administrative Services lacked adequate procedures for ensuring the accuracy of amounts not obtained directly from the accounting system. Administrative Services established a specific account code for aid to subrecipients, but not all agencies utilized this code. Effect: Increased risk for the SEFA to be inaccurate, which could lead to Federal sanctions or programs not being audited that should be. Recommendation: We recommend Administrative Services improve procedures to ensure the SEFA is complete and accurate. Management Response: We will continue to work with State teammates to ensure the SEFA is accurate and complete. The original total SEFA expenditures were 99.3% accurate.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability Grant Number & Year: #2105NE5MAP, FFY 2021; #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.302(a) (October 1, 2021), each state must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State?s own funds. Per 45 CFR ? 75.403 (October 1, 2021), costs must be necessary, reasonable, and adequately documented. Title 471 NAC 15-003.02(1) (effective June 2, 2004, through June 5, 2022) states that personal assistance services not documented in the service plan are non-allowable services. Title 471 NAC 15-006 (effective June 2, 2004, through June 5, 2022) requires that the provider bill only for services provided and authorized, perform the personal assistance services noted on the service plan, and accurately document services provided on Form MC-37 ?Service Provider Timesheet.? Title 471 NAC 15-006.06C (effective June 2, 2004, through June 5, 2022) requires that, after receiving a provider?s timesheet and billing document, the beneficiary?s social service worker or designee must verify that ?the hours worked and services provided fall within the parameters of those authorized? by the service needs assessment. Title 471 NAC 15-003.02(H) (effective June 6, 2022) requires that the provider perform the personal assistance services noted on the service plan, accurately document services provided in the Electronic Visit Verification (EVV) system, and confirm that services were received as authorized according to Agency procedures. The Provider?s Guide for Billing PAS Recap states, ?Gather participant?s signature at each visit in EVV APP.? A good internal control plan requires procedures to ensure services provided agree to the service needs assessment. Section 1903(l)(5)(A) of the Social Security Act states the following: The term ?electronic visit verification system? means, with respect to personal care services or home health care services, a system under which visits conducted as part of such services are electronically verified with respect to ? (i) the type of service performed; (ii) the individual receiving the service; (iii) the date of the service; (iv) the location of service delivery; (v) the individual providing the service; and (vi) the time the service begins and ends. Condition: During testing of personal assistance service (PAS) claims, we noted the following: ? Services provided lacked adequate supporting documentation. This included, among other related shortcomings identified, a lack of information from the EVV specifying the activities or tasks performed by the provider. ? Services billed exceeded the number of hours authorized under the service needs assessments. ? Providers billed for unreasonable amounts of time ? including, among other things, for more daily hours than are in a 24-hour period and for unfeasible scenarios, such as the supposed performance of a week?s worth of duties for one client in a single day. One provider received compensation, including overtime pay, for six months during which no client services appear to have been performed. ? Providers received overtime pay for unauthorized services, meaning that they were compensated at an increased rate for services ineligible for payment in the first place. ? Client guardians or parents were paid for providing services, which violates governing regulations prohibiting such arrangements. ? Providers received incorrect pay rates for services rendered, resulting in significant overpayments. A similar finding has been noted in prior audits since 2014. Repeat Finding: 2021-048 Questioned Costs: $51,331 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The Agency offers personal assistance services (assistance with hygiene, mobility, housekeeping, etc.) to Medicaid recipients with disabilities and chronic conditions. The services to be provided are based on individual needs and criteria that must be determined in a written service needs assessment (SNA). The Agency implemented an electronic visit verification system for PAS providers on January 3, 2021, as required by Section 12006(a) of the 21st Century CURES Act, passed by Congress in 2016. The EVV system electronically captured and verified provider visit information, and providers were required to submit claims to the Agency electronically through this application. We selected five provider payments for testing, and from there, one week of services submitted through the EVV system. A week of service billed by the provider may include multiple claims and clients. The Agency was unable to provide documentation from the EVV system of client signatures and the specific activities or tasks performed by the provider. Claim detail provided included the start and stop times and location of the visit, but there was no record of what tasks were provided on each day and for how long to ensure compliance with the SNA. Therefore, we questioned the entire claims initially selected for testing, resulting in questioned costs of $4,011. It should be noted these deficiencies were identified in the prior audit, and no enhancements have been made to the EVV system to address these issues. We also identified other issues with the billings submitted by each provider. Therefore, we reviewed additional claims submitted by the providers. We reviewed the claim information in NFOCUS that identified the total number of quarterly units billed each day. We noted the following issues with the five providers tested: Provider 1 The provider was authorized for up to 226 quarterly units or 56.5 hours of service per week. The provider billed and was paid for 25 hours of service on July 30, 2021, and for 24.5 hours of service on September 28, 2021. It is impossible for a provider to provide more than 24 hours of service in one day. The provider also billed for hours that exceeded the SNA limit for the claim tested and for an additional four weeks reviewed during the fiscal year. Below is a summary of the weeks that exceeded the SNA. See Schedule of Findings and Questioned Costs for chart/table. In addition to the services billed that exceeded the SNA, we also noted the provider was the client?s guardian and parent. Per CFR 42 ? 440.167, personal care services cannot be provided by a member of the individual?s family. A family member is defined as a legally responsible relative. The provider is a legally responsible relative of the client as the guardian and is not allowed to get paid for these services. The Nebraska Medicaid State Plan also states that services are provided by those who are not legally responsible relatives. Title 471 NAC 15-006.01A(3), effective through June 5, 2022, also stated that a legally responsible relative cannot provide services for the client. Therefore, all payments made during fiscal year 2022 are questioned. Along with the initial claim tested, the provider was paid an additional $20,944 that is not allowable. Provider #2 The provider was authorized 160 quarterly units or 40 hours of service per week. For the claim tested, the provider exceeded the SNA by 180 quarterly units or 45 hours. This included 24 hours of care billed on both October 20, 2021, and October 22, 2021. These hours were questioned above due to inadequate documentation. The provider exceeded the weekly authorized hours for 11 weeks reviewed and billed between 2 to 33.25 hours over the SNA each week, resulting in additional questioned costs of $980. We also noted that the provider worked full time at a public school during the school year; therefore, it is likely hours billed for PAS on weekdays overlap with time worked at the school. This provider was also noted as billing over the authorized limit during last year?s audit, and no overpayments were established and the overbilling has continued. Provider #3 The Agency authorized this provider to provide 486 quarterly units or 121.5 hours of service per week for four different clients. It is not reasonable to authorize this many hours of service for one provider, as it would take over 17 hours every day of the week in order to perform all the tasks noted on the SNA. For the week tested, the provider billed 476 quarterly units or 119 hours for the week. Each SNA of these clients included some services to be performed every day of the week. For one client, the provider billed a week of services on one day. As an example, 20 minutes for a bath or shower was authorized seven times for the week or once a day. It is not reasonable that seven baths or showers were provided on one day. For this same client, assistance with meal preparation was authorized three times per day for seven days. It is not reasonable that assistance with meal preparation was provided 21 times on one day. These claims were questioned above for inadequate documentation. We reviewed an additional two weeks of services, and the provider billed for tasks authorized for seven days per week but did not provide services each of the seven days a week for all clients. For example, if a client was authorized for a bath seven times for the week, but the provider performed services on only two days, we considered the hours charged for five baths to be overbilled. This resulted in additional questioned costs of $372. It should be noted that only these two weeks were reviewed, so there may be additional questioned costs for other weeks based on the frequency of tasks authorized. See Schedule of Findings and Questioned Costs for chart/table. The provider was also paid overtime hours for these two weeks. In addition to being overpaid due to billing for tasks that were not provided as authorized, the provider received overtime pay for this overbilling, resulting in an additional $183 in questioned costs. Providers are paid at time and one-half for services in excess of 40 hours each week. Per the Agency, there is a claims overtime team that reviews the service authorizations to ensure they are not exceeded. For the two weeks reviewed alone, the provider was paid for 78.45 and 63.27 hours of overtime. Provider 4 The provider was authorized 84 quarterly units or 21 hours for one client and 146 quarterly hours units or 36.50 hours per week for another. For the claims tested, the EVV claim detail supported the number of hours billed; however, six hours of service for one client was shown to be provided by another provider, and an additional two hours was shown as provided at the provider?s address. The claim was questioned above for inadequate documentation. We also noted that the incorrect rate was paid to the provider during all of fiscal year 2022, resulting in $22,800 additional questioned costs for fiscal year 2022. The agreement between the Agency and the provider could not be located in NFOCUS, and it was requested from the Agency on June 22, 2022, and was provided on June 29, 2022. Per a narrative in NFOCUS, the agreement was missing and was found in a file on a Resource Development worker?s laptop. The agreement was completed but not signed by the provider, so it was emailed to the provider, and the signed copy was returned on June 28, 2022. Per the agreement, the rate was $2.45 per quarterly unit or $9.80 per hour. This rate agrees to the quarterly hour rate for basic personal assistance care as of July 1, 2021, per Title 471 NAC 000-515. The rate for specialized personal assistance was $2.74 per quarterly hour as of July 1, 2021; however, no evidence was provided that the provider qualified for this rate. The provider?s agreement began on August 2, 2021. The following rates were paid: See Schedule of Findings and Questioned Costs for chart/table. Provider 5 This provider was authorized 584 quarterly units or 146 hours of service per week for four different clients. This is unreasonable as it would take over 20 hours every day of the week to perform all of the tasks noted on the SNA for all clients. The EVV claim detail supported the number of hours billed; however, the verification method noted ?NON? for each entry with manual edits. A provider who is manually entering visits in the provider portal through a computer can deny tracking of the location. Although the hours billed did not exceed the SNAs for the week tested, the provider billed 101.25 hours for the week with care up to 18 and 20 hours of service per day. This provider was tested during the prior-year audit with overlapping of services and billing over the SNA. We reviewed additional claims paid during the fiscal year. The provider overbilled 3.25 hours one week for a client with questioned costs of $22. The provider also billed over the SNA for a second client for 17 weeks from July 2021 through November 2021. This client was authorized to receive 79 quarterly units or 19.75 hours of service each week. The provider billed between 10.25 to 22.25 hours over the authorized hours, resulting in questioned costs of $2,019. We did not review the specific activities noted on the SNA and did not obtain actual time of services; therefore, there could be additional questioned costs for activities not performed according to the SNA. On November 5, 2021, during the PAS renewal, this second client told the Agency that the provider had not been in the client?s apartment in over a year. The service authorization for the client was open with the provider through December 4, 2021. Services were billed from June 2021 through November 22, 2021. Based on the client?s phone call with the Agency, the provider did not provide care from June 2021 through November 2021, so all those payments may be questionable. The provider was also paid overtime for most weeks that the provider overbilled for the two clients. As stated earlier, the overtime team reviews the claims paid and the service authorizations. It is evident the Agency was aware the provider was billing over the authorized hours for the two clients, because it only allowed overtime for hours provided or up to the maximum authorized hours, whichever was less, to be included in the weekly total. No overpayments were established for billing over the authorization for the two clients. Again, there could be additional questioned costs for overtime hours if the provider did not provide care for the second client from June 2021 through November 2021. Federal payment errors noted totaled $51,331. The Federal payments tested totaled $85,074, and the total Federal share of PAS payments for the fiscal year was $5,935,883. The total State share of PAS payments for the fiscal year was $3,462,220 for a total of $9,398,103. Due to the EVV system deficiencies, we consider all dollars to be at risk. Cause: Procedures were not adequate to prevent and/or detect errors. Effect: An inadequate review of PAS claims increases the risk of services provided not being in accordance with the recipient?s needs, as well as a risk of services being billed but not provided. There is a significant risk for fraud or abuse occurring and not being detected. State and Federal funds appear to have been misspent. Recommendation: We recommend the Agency implement procedures to ensure payments are allowable, adequately supported, and in accordance with State and Federal regulations. Management Response: The Agency agrees with the finding.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability and Eligibility Grant Number & Year: #2105NE5MAP, FFY21; #2205NE5MAP, FFY22 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR ? 75.302(a) (October 1, 2021), ?Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds.? 45 CFR ? 75.403(g) (October 1, 2021) requires costs to be adequately documented. Per 477 NAC 23-003.01: The total equity value of available non-excluded resources of the client . . . is determined and compared with the established maximum for available resources the client may own and still be considered eligible. If the total equity value of available non-excluded resources exceeds the established maximum, the client is ineligible. Per 477 NAC 23-003.05(A)(iii): A specified maximum may be disregarded if it is set aside for the purpose of paying burial expenses. Further, 477 NAC 23-003.05(A)(iii)(1)(b) states that for burial policies, ?If the client has irrevocably assigned more than the specified maximum in burial insurance, the excess is not an available resource but may be a deprivation of resources.? According to NAC Medicaid Eligibility Appendix 477-000-012, the maximum for a burial trust was $5,654, effective September 1, 2021. Per 477 NAC 23-003.10, the established maximum for available resources which a client may own and still be eligible is $4,000 for a one-member unit. Per 477 NAC 23-003.05(B)(v)(1)(a): The disregard of any motor vehicle is not allowed when it has been determined a client residing in a nursing home or an assisted living facility and receiving services through Home and Community Based Services or Programs or All-Inclusive Care for the Elderly does not intend, or will not be able to return home if medical transportation is included in the payment to the facility[.] Per 477 NAC 23-003.07(B)(ii)(1), ?Ownership of a motor vehicle is verified by the title. The number of individuals on the title legally determines the percentage of ownership.? 477 NAC 23-003.04(A) defines a ?deprivation of resources? as follows: Any action taken by the applicant or client, or any other person or entity, which reduces or eliminates the applicant?s, client?s, or spouse?s recorded ownership or control of the asset for less than fair market value is a deprivation of resources. The fair market value of a resource at the time the resource was disposed of must be verified and the equity value of the resource must be determined by taking into consideration any encumbrances against the resource. . . . 42 CFR ? 435.916(b) (October 1, 2021) requires the Agency to make a redetermination of eligibility in accordance with provisions of paragraph (a)(2) of that section, which states, ?The agency must make a redetermination of eligibility without requiring information from the individual if able to do so based on reliable information contained in the individual?s account or other more current information available to the agency, including but not limited to information accessed through any data bases accessed by the agency . . . .? A good internal control plan requires procedures to ensure that income and resources are updated for changes timely, adequately documented, and verified. Condition: The Agency did not adequately verify the income and resources of individuals residing in long-term care facilities to ensure that limits were not exceeded, and the individuals were eligible. A similar finding was noted in the prior audit. Repeat Finding: 2021-049 Questioned Costs: $5,368 known (#2205NE5MAP $4,848; COVID-19 #2205NE5MAP $520) Statistical Sample: No Context: We tested 25 long-term care facility payments and noted the following issues: ? One recipient?s budget from January 2020 through August 2022 was reduced by $65 for a dental insurance premium. However, the dental insurance policy was cancelled effective December 1, 2019, and no premiums were paid by the recipient. This resulted in an overpayment of $65, with a Federal share of $42 for the claim tested. ? For one recipient, the budget for February 2022 included the 2020 social security income amount of $873 rather than the 2022 social security income amount of $937, a variance of $64. This resulted in Federal share questioned costs of $41 for the claim tested. The budgets beginning October 2022 used the correct amount for calendar year 2022. ? For one recipient, the February 2022 budget was not updated with the 2022 social security income and pension amounts, resulting in an overpayment of $185, with a Federal share of $118. The Agency was unable to complete the Medicaid renewal process because requested verifications were not provided. Due to the COVID-19 Public Health Emergency, the case was not closed, and the renewal was extended for six months, and the prior income and resource amounts from 2021 were left in the budget. However, the social security income can be verified through the income and eligibility verification system (IEVS), and the budget could be updated with the correct income, causing an increase to the share of cost but not affecting overall eligibility. ? The April 2022 budget for one recipient included the incorrect amounts for the checking and savings bank accounts, resulting in the recipient being over the $4,000 resource limit by $3,228. The entire claim is questioned, resulting in Federal share sample questioned costs of $4,049. ? The budget for one recipient included two burial trusts for a total of $10,696. The Agency failed to obtain a copy of the burial contract to determine if there were countable assets related to this trust. Instead, the entire trust amounts were included in the recipient?s budget as a non-countable resource. Additionally, the resident trust account was not included as a resource. It is unknown if the recipient would have been under the $4,000 resource limit without this documentation; therefore, the claim is questioned, resulting in Federal share sample questioned costs of $1,074. ? Two providers billed the same day for one recipient. The recipient resided in an assisted living facility and was discharged on September 23, 2021, to a nursing facility. Both facilities were paid for services on September 24, 2021, resulting in non-sample Federal share questioned costs of $44. ? One recipient had title to eight vehicles that were not currently registered; however, none of these vehicles were included as resources. If the vehicles were still in the recipient?s possession, the value should have been included as an available resource, which may have affected Medicaid eligibility. The Agency failed to conduct an independent search for vehicles and consider their value as a potential resource if they were still in the recipient?s possession. Federal payment errors noted in the sample were $5,324. The total Federal sample tested was $103,839, and the total Federal long-term care facility expenditures during the fiscal year were $263,831,164. Based on the sample tested, the case error rate was 28% (7/25). The dollar error rate was 5.13% ($5,324/$263,831,164), which projects the potential dollars at risk for fiscal year 2022 to be $13,534,539 (dollar error rate multiplied by population). Cause: Worker error and inadequate review Effect: If income and resources are not adequately verified, there is an increased risk recipients will be inappropriately determined eligible for Medicaid or determined eligible with an incorrect share of cost. Recommendation: We recommend the Agency implement procedures to ensure all resources are identified, verified, and adequately documented. Management Response: The Agency partially agrees with the finding. The agency disagrees with several findings as the APA noted, the agency could not complete renewals on several of the cases due to not having received all of the required information. However, the APAs findings indicate they believe the agency should have run budgets with only partial information (e.g. social security income) included. Outside of the public health emergency, the agency would have closed these cases. However, due to the public health emergency, the cases must remain open and per policy guidance, the renewal date should be extended rather than completing a renewal with incomplete information. The agency agrees with the findings regarding the lack of verification on file or worker error in entering information into the system. APA Response: Six of the seven exceptions noted were due to worker error. For the recipient noted in the third bullet, the social security income should have been updated using IEVS, and the pension income could have been verified by calling Veterans? Affairs.
Program: AL 93.778 ? Medical Assistance Program ? Special Tests and Provisions Grant Number & Year: All open, including #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Title 42 CFR ? 447.253(b)(1)(i) (October 1, 2021) provides the following: The Medicaid agency pays for inpatient hospital services and long-term care facility services through the use of rates that are reasonable and adequate to meet the costs that must be incurred by efficiently and economically operated providers to provide services in conformity with applicable State and Federal laws, regulations, and quality and safety standards. According to 42 CFR ? 447.253(g) (October 1, 2021), ?The Medicaid agency must provide for periodic audits of the financial and statistical records of participating providers.? The Nebraska Medicaid State Plan, Attachment 4.19-D, 12-011.11 (Audits), says the following: The Department will perform at least one initial desk audit and may perform subsequent desk audits and/or a periodic field audit of each cost report. Selection of subsequent desk audits and field audits will be made as determined necessary by the Department to maintain the integrity of the Nebraska Medical Assistance Program. The Department may retain an outside independent public accounting firm, licensed to do business in Nebraska or the state where the financial records are maintained, to perform the audits. Audit reports must be completed on all field audits and desk audits. AICPA Professional Standards AU-C Section 500, regarding audit evidence, states that audit evidence obtained directly by the auditor is more reliable than audit evidence obtained indirectly or by inference, and using electronic information may require the auditor to perform additional audit procedures to establish reliability. A good internal control plan requires field audits on long-term care facilities considered high risk to be completed as soon as possible to ensure issues are resolved timely and to reduce the risk for errors or abuse to occur. A good internal control plan also requires desk audits to include a testing sample of actual expenses. Condition: We noted that the Agency did not perform field audits on any long-term care facilities during fiscal year ended June 30, 2022. We also noted that procedures for desk audits did not obtain adequate evidence to ensure costs reported were accurate and proper. A similar finding was noted in prior audits. Repeat Finding: 2021-050 Questioned Costs: Unknown Statistical Sample: No Context: Agency procedures require a desk audit on each annual cost report provided by long-term care facilities that receive Medicaid funding, and a field audit on facilities identified by the Agency as high risk. We noted the following: ? We reviewed 20 desk audits and noted that limited procedures were performed. Costs were traced to the facilities? trial balance, but no underlying supporting documentation was obtained for significant costs, such as salaries, food, or supplies. In many of the desk audits, large increases in costs were attributed to the COVID-19 health emergency, without gaining any additional support to verify the higher costs. ? No field audits were completed during the fiscal year. Two facilities identified in fiscal year 2017 should have had field audits prior to the end of the fiscal year, but no field audits were performed. The Agency?s contractor identified 22 other facilities as high-risk between the fiscal year 2018 and fiscal year 2021 cost reports. Per the contractor, field audit work is to start in September 2022. The total Federal share of nursing facility expenditures during fiscal year 2022 was over $260 million. Cause: The contractor had not been engaged to complete the fiscal year 2017 field audits and will not start on the other field audits until September 2022. Effect: When facilities do not have proper desk audits and timely field audits, there is an increased risk for submitted cost reports to contain errors or fraud. Also, without adequate procedures, there is an increased risk for the misuse of Federal funds and noncompliance with Federal regulations. Recommendation: We recommend the Agency devote adequate resources to field audits of long-term care facilities and ensure desk audits provide reasonable assurance that cost reports are accurate. Management Response: The Agency partially agrees with the finding. DHHS believes that the work done by Myers & Stauffer for the Desk Reviews is sufficient in determining accuracy and accountability of costs for providers. DHHS acknowledges that field audits should be performed but the delay in signing the Myers & Stauffer contract led to the delay in Field audits as the Desk Reviews for 2021 and 2022 were deemed to be a priority over the Field Audit work. APA Response: As noted above, no underlying supporting documentation was obtained for significant costs reported, and no support was obtained to verify the large increases in costs.
Program: AL 93.778 ? Medical Assistance Program; AL 93.767 ? Children?s Health Insurance Program (CHIP) ? Special Tests and Provisions Grant Number & Year: All open, including #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per Title 42 CFR ? 455.104(b)(4) (October 1, 2021), the State Medicaid Agency must require the disclosing entity to provide the following disclosures: The name, address, date of birth, and Social Security Number of any managing employee of the disclosing entity (or fiscal agent or managed care entity). Per 42 ? CFR 455.101 (October 1, 2021): Managing employee means a general manager, business manager, administrator, director, or other individual who exercises operational or managerial control over, or who directly or indirectly conducts the day-to-day operation of an institution, organization, or agency. Per the Medicaid Provider Enrollment Compendium (MPEC) (3/22/21), Section 1.4.1C: There are not exceptions to the managing employee disclosure requirement. To the extent any individual meets the definition of ?managing employee? under ?455.101, their information is required to be disclosed. Section 1.4.1C of the MPEC also contains the following: d. Non-Profit Entities Non-profit entities generally do not have owners unless state law permits such ownership. However, if a non-profit entity has managing employees, to the extent these individuals meet the definition of ?managing employee? under ? 455.101; they would have to be disclosed as such. In addition, as discussed further below, entities, including non-profit entities, that are organized as corporations must provide disclosures regarding their officers and directors. e. Government-Owned Entities There is not an exception for government-owned entities. Government-owned entities likewise need to disclose anyone meeting the definition of ?managing employee,? and would only need to disclose board members if the entity was organized as a corporation or if that individual meets the definition of ?managing employee.? See 1.4.C.1.d ?Managing Employee Disclosure.? Per 42 CFR ? 455.436 (October 1, 2021), the State Medicaid Agency must do the following: (a) Confirm the identity and determine the exclusion status of providers and any person with an ownership or control interest or who is an agent or managing employee of the provider through routine checks of Federal databases. (b) Check the Social Security Administration?s Death Master File, the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the Excluded Parties List System (EPLS), and any such other databases as the Secretary may prescribe. (c)(1) Consult appropriate databases to confirm identity upon enrollment and reenrollment; and (2) Check the LEIE and EPLS no less frequently than monthly. 45 CFR ? 75.303 (October 1, 2021) requires the Agency to ?[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? 45 CFR ? 75.511(b) (October 1, 2021) states, in relevant part, the following: The summary schedule of prior audit findings must report the status of all audit findings included in the prior audit?s schedule of findings and questioned costs. . . . * * * * (2) When audit findings were not corrected or were only partially corrected, the summary schedule must describe the reasons for the finding?s recurrence and planned corrective action, and any partial corrective action taken. When corrective action taken is significantly different from corrective action previously reported in a corrective action plan or in the Federal agency?s or pass-through entity?s management decision, the summary schedule must provide an explanation. Good internal control requires procedures to ensure that all required disclosures are provided. Condition: Three of 25 providers tested did not include disclosure requirements for managing employees. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Repeat Finding: 2021-051 Questioned Costs: Unknown Statistical Sample: No Context: We tested screening and enrollment for 25 Medicaid/CHIP providers. We noted that three providers, a public school, a non-profit corporation, and a for-profit corporation, failed to disclose any managing employee. Therefore, no screenings for managing employees were performed for these three providers. Cause: The Agency relies on each provider?s disclosure to be complete, true, and accurate. The provider is allowed to complete the enrollment process even if an owner or managing employee is not disclosed. Effect: Without adequate procedures to ensure providers are screened, and disclosures are complete, there is an increased risk of provider ineligibility, which could result in unallowable costs or potential harm to patients. Recommendation: We recommend the Agency obtain disclosures and screen providers as required by Federal regulations. Management Response: The Agency partially agrees with the finding. The federal regulations and MPEC require that the SMA obtain the disclosure of managing employees, that providers disclose the information, and that the SMA screen the information that is disclosed. The federal law and MPEC do not mandate that a provider must have at least one managing employee. When enrolling and revalidating their agreements, providers are directed to disclose owners and managing employees. If they fail to enter managing employee information and attempt to submit their agreement, they are directed to verify their entry and correct before submitting. It is up to the provider to determine if they have managing employees and disclose them. If the Department learns that a provider has managing employees that have not been disclosed, the provider will be directed to update their provider agreement or face sanctions. APA Response: It is not sufficient for the Agency to rely on the provider?s disclosures. Obvious errors and omissions should be reviewed to ensure compliance with Federal regulations.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability Grant Number & Year: #2105NE5MAP, FFY 2021; #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303(a) (October 1, 2021) requires the Agency to ?[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Title 45 CFR ? 75.403(g) (October 1, 2021) requires costs to be adequately documented. The ? 1915(c) Home and Community-Based Services Waiver, effective October 1, 2020, through September 30, 2021, states, in part, the following: Individual programs must be specific and measurable and updated when not yielding progress, and data must be tracked and analyzed for trends. Monthly summary reports on progress or lack of progress must be made available upon request. Good internal control requires procedures to ensure that costs are in accordance with State and Federal requirements. Condition: We tested 25 claims paid from the Comprehensive Developmental Disability (CDD) Waiver and noted that two payments tested did not have adequate documentation. A similar finding was noted in the prior audit. Repeat Finding: 2021-052 Questioned Costs: $124 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For two claims tested, we noted that monthly reporting of specific and measurable data used to analyze a recipient?s progress within the program was not on file or available upon request. Without such support we could not verify that proper services were provided. Federal payment errors for the sample tested were $124. The total Federal sample tested was $20,603, and the total of CDD payments for the fiscal year was $193,111,484. The dollar error rate for the sample was 0.60% ($124/$20,603), which estimates potential dollars at risk for fiscal year 2022 to be $1,158,669 (dollar error rate multiplied by population). Cause: Procedures were not adequate to ensure that monthly progress reports were properly completed and on file. Effect: Increased risk for unallowable charges and noncompliance with regulations. Recommendation: We recommend the Agency implement procedures to ensure that adequate documentation, including monthly progress reports, is maintained to support CDD payments. Management Response: The Agency agrees with the finding.
Program: AL 93.778 Medical Assistance Program ? Special Tests and Provisions Grant Number & Year: #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 42 CFR ? 438.3(m) (October 1, 2021), ?The contract must require MCOs [managed care organizations], PIHPs [prepaid inpatient health plans], and PAHPs [prepaid ambulatory health plans] to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles and generally accepted auditing standards.? 42 CFR ? 438.602(e) states, ?The State must periodically, but no less frequently than once every 3 years, conduct, or contract for the conduct of, an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO, PIHP or PAHP.? 42 CFR ? 438.602(g) directs this audit to be posted on the State?s website. A good internal control plan requires policies and procedures to ensure that mandatory financial audits are completed timely and in accordance with Federal regulations. Condition: The Agency does not have adequate policies and procedures to ensure that required managed care financial audits are completed timely and in accordance with Federal regulations. The MCO and PAHP audited financial reports for the year ended December 31, 2021, were not conducted in accordance with generally accepted accounting principles (GAAP). The required periodic audit of the MCOs and PAHP have not been conducted and posted on the Agency?s website. A similar finding was noted in the prior audit. Repeat Finding: 2021-053 Questioned Costs: Unknown Statistical Sample: No Context: Nebraska Total Care, Inc., Community Care Health Plan of Nebraska, Inc., United Healthcare of the Midlands, Inc., and MCNA Insurance Company had audits performed in accordance with generally accepted auditing standards; however, the financial statements were not in accordance with GAAP. The financial statements for the MCOs were prepared using ?accounting practices prescribed or permitted by the Nebraska Department of Insurance, which is a basis of accounting other than U.S. generally accepted accounting principles.? The PAHP audit was prepared using ?accounting practices prescribed or permitted by the Texas Department of Insurance . . . .? The Department of Insurance has adopted the Statement of Statutory Accounting Principles (SSAP) found in the National Association of Insurance Commissioners? (NAIC) manual. The required periodic independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by or on behalf of each MCO, PIHP, or PAHP has not been conducted. The Agency executed a contract with Myers & Stauffer LLC on November 22, 2021, to conduct the required financial audit reports for the MCOs and PAHP. Per the Medicaid Deputy Director, the audits will be completed and posted to the Agency?s website during state fiscal year 2023. Cause: The MCO and PAHP audited financial reports are completed for the Nebraska Department of Insurance, which does not require the audit to be conducted in accordance with GAAP. The contract to conduct the financial audits of the MCO and PAHP was awarded to the outside vendor in November 2021, and the vendor is in the process of completing the audits. Effect: When the financial audits completed by the MCOs and PAHP are not conducted according to GAAP, and the independent audit of the MCOs and PAHP is not completed, the Agency is not in compliance with Federal regulations, and there is an increased risk for fraud or errors. Recommendation: We recommend the Agency require the MCO and PAHP financial audits to be conducted in accordance with GAAP. We further recommend the Agency ensure the required audit of the accuracy, truthfulness, and completeness of the encounter and financial data of the MCOs and PAHP is completed timely and posted on the Agency?s website. Management Response: The Agency agrees with the finding.
Program: AL 93.778 ? Medical Assistance Program ? Special Tests and Provisions Grant Number & Year: All open, including #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Title 42 CFR ? 455.1 (October 1, 2021) sets forth requirements for a State fraud detection and investigation program, including a method to verify whether services reimbursed by Medicaid were actually furnished to beneficiaries. The Agency?s Program Integrity and Special Investigations Units (SIU) perform these functions. Per 42 CFR ? 455.14 (October 1, 2021): If the agency receives a complaint of Medicaid fraud or abuse from any source or identifies any questionable practices, it must conduct a preliminary investigation to determine whether there is sufficient basis to warrant a full investigation. 42 CFR ? 440.170(a)(4)(i) (October 1, 2021) states, in part, the following: Non-emergency medical transportation services may be provided under contract with individuals or entities that meet the following requirements: * * * * (B) Has oversight procedures to monitor beneficiary access and complaints and ensure that transportation is timely and that transport personnel are licensed, qualified, competent, and courteous. Title 471 NAC 2-005.01 (eff. 9/21/2020) states, in part, the following: The Department may, in its discretion, deny enrollment or sanction a provider for any of the following reasons: * * * * (37) The provider is the respondent of a protection order; * * * * (39) The provider, or household member(s) (if services are provided in the provider?s home), committed a crime: (i) Against a child or vulnerable adult; (ii) Of a nature, duration, or pattern that calls into question his or her regard for the law; (iii) Involving the illegal use, possession, or distribution of a controlled substance; or (iv) That, if repeated, could injure or harm the Medicaid program or a Medicaid client. Title 471 NAC 27-008.03 (eff.7/12/2021) provides the following: Provider staff must ensure criminal history checks are completed for each potential driver prior to providing services and annually thereafter. Any person whose result includes the driver being the respondent of a protection order, crimes against a child or vulnerable adult, drug-related crimes, or crimes that if repeated could harm a Medicaid client, must not be enrolled or allowed to provide transportation to Nebraska Medicaid clients. Program Integrity?s Policies and Procedures state the following: Providers with convictions and charges pending in the following areas should be referred into the State Queue: * * * * 3. Child Neglect, physical abuse, or sexual abuse * * * * 6. Driving Under the Influence; two of any combination of DUI charges pending or convictions (5 Years) * * * * 13. Currently the respondent of a protection order Other pending charges and convictions should be considered and weighted to similar offenses included in this list. Generally speaking, this includes charges and/or convictions which, if repeated, could injure or harm the Medicaid program or a Medicaid client. Good internal control requires procedures to ensure cases are reviewed, and appropriate dispositions are made in a timely manner. Condition: For 3 of the 20 Program Integrity cases tested, there was a lack of documentation to support that a proper review had been completed. Repeat Finding: No Questioned Costs: Unknown Statistical Sample: No Context: Program Integrity is tasked with, among other things, investigating cases of potential Provider fraud in the Medicaid Program. If an investigation leads to valid findings, Program Integrity may refer the case to the Attorney General?s office, or it may sanction a provider, request a refund, provide education, and/or terminate the provider from the Medicaid Program. We tested 20 of 478 Program Integrity cases open or closed during the fiscal year and noted the following: ? One case, which was opened prior to January 2020 (no documentation was available to determine when the case was first opened), had no new information added to the case after January 9, 2020, and was closed on December 7, 2021, citing: ?Investigation failed to substantiate the allegation of not rendering services as billed.? The Agency?s department supervisor was unable to determine what was found during the investigation to warrant the case?s closure. ? One case, opened in February 2020, was to review a large increase in billings for a provider. The investigator was initially working with the managed care organization (MCO), WellCare, to verify why the billings increased. Ten months later, on December 22, 2020, the investigator?s case notes discussed referring the case and working with another MCO, Nebraska Total Care, for recouping costs. There were no clear notes in between the initial actions and the notes added later to indicate what was discovered during the investigation and how the investigator went from working exclusively with one MCO to another. The Agency could not clarify what happened during the case, and the Agency agreed that the case was ?missing lots of things.? The case was closed November 2, 2021, giving Nebraska Total Care permission to proceed with provider education and collection of overpayments of identified claims. ? For one case, opened in April 2021, documentation was not on file to support that the investigation was properly completed. The case opened because the owner of a transportation provider (i.e., taxicab) had pending child abuse charges, which is grounds for termination. Additionally, there appeared to be possible overbillings. The Agency determined that the owner was listed incorrectly on the State?s provider database; however, the Agency noted that the actual owner had two DUI charges and a charge for Possession of a Destructive Device. Based on the Agency?s guidelines, these alone could be grounds for sanctions or termination, especially if he was a driver. The Agency contacted the actual owner and requested a list of drivers and their screenings. Later, the Agency also requested support for the paid claims and informed the owner that he needed to update his information in the provider database. The program never received the support to determine if the owner was a driver or to verify that the provider was not overbilling on claims. The case was closed on December 6, 2021, before confirmation was obtained that the provider database had been updated. We also noted that, during the time the investigation was open, the owner was respondent to a harassment protection order and found guilty of charges on three separate cases: driving during revocation; violation of the protection order; and false reporting. Had the Agency performed a criminal background check before closing the case, these convictions would have been discovered and would have been further grounds for sanctions or termination, per Title 471 NAC 2-005.01. We also found that the owner had more recent charges, after the case was closed, including possession of a controlled substance and first-degree sexual assault (both of which were bound over to District court for probable cause) and driving during revocation (second offense), and was also current respondent to a harassment protection order. When the Auditor of Public Accounts (APA) inquired with the Agency about this case, the Agency indicated that the case would be reopened to ensure the provider database was updated with the correct owner listed. Cause: The Agency did not follow proper procedures, including supervisor reviews of cases, to ensure that Program Integrity cases were worked in a proper and timely fashion. Effect: When potential fraud cases are not pursued adequately and timely, there is an increased risk for misuse of funds and potential harm to individuals receiving services. Recommendation: We recommend the Agency implement procedures to ensure Program Integrity cases are reviewed properly and timely, and appropriate dispositions are made. Management Response: The Agency agrees with the finding.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability Grant Number & Year: #2105NE5MAP, FFY 2021; #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.302(a) (October 1, 2021), each state must expend and account for the Federal award in accordance with State laws and procedures for expending and accounting for the State?s own funds. Per 45 CFR ? 75.403 (October 1, 2021), costs must be necessary, reasonable, and adequately documented. Title 471 NAC 15-003.02(1) (effective June 2, 2004, through June 5, 2022) states that personal assistance services not documented in the service plan are non-allowable services. Title 471 NAC 15-006 (effective June 2, 2004, through June 5, 2022) requires that the provider bill only for services provided and authorized, perform the personal assistance services noted on the service plan, and accurately document services provided on Form MC-37 ?Service Provider Timesheet.? Title 471 NAC 15-006.06C (effective June 2, 2004, through June 5, 2022) requires that, after receiving a provider?s timesheet and billing document, the beneficiary?s social service worker or designee must verify that ?the hours worked and services provided fall within the parameters of those authorized? by the service needs assessment. Title 471 NAC 15-003.02(H) (effective June 6, 2022) requires that the provider perform the personal assistance services noted on the service plan, accurately document services provided in the Electronic Visit Verification (EVV) system, and confirm that services were received as authorized according to Agency procedures. The Provider?s Guide for Billing PAS Recap states, ?Gather participant?s signature at each visit in EVV APP.? A good internal control plan requires procedures to ensure services provided agree to the service needs assessment. Section 1903(l)(5)(A) of the Social Security Act states the following: The term ?electronic visit verification system? means, with respect to personal care services or home health care services, a system under which visits conducted as part of such services are electronically verified with respect to ? (i) the type of service performed; (ii) the individual receiving the service; (iii) the date of the service; (iv) the location of service delivery; (v) the individual providing the service; and (vi) the time the service begins and ends. Condition: During testing of personal assistance service (PAS) claims, we noted the following: ? Services provided lacked adequate supporting documentation. This included, among other related shortcomings identified, a lack of information from the EVV specifying the activities or tasks performed by the provider. ? Services billed exceeded the number of hours authorized under the service needs assessments. ? Providers billed for unreasonable amounts of time ? including, among other things, for more daily hours than are in a 24-hour period and for unfeasible scenarios, such as the supposed performance of a week?s worth of duties for one client in a single day. One provider received compensation, including overtime pay, for six months during which no client services appear to have been performed. ? Providers received overtime pay for unauthorized services, meaning that they were compensated at an increased rate for services ineligible for payment in the first place. ? Client guardians or parents were paid for providing services, which violates governing regulations prohibiting such arrangements. ? Providers received incorrect pay rates for services rendered, resulting in significant overpayments. A similar finding has been noted in prior audits since 2014. Repeat Finding: 2021-048 Questioned Costs: $51,331 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: The Agency offers personal assistance services (assistance with hygiene, mobility, housekeeping, etc.) to Medicaid recipients with disabilities and chronic conditions. The services to be provided are based on individual needs and criteria that must be determined in a written service needs assessment (SNA). The Agency implemented an electronic visit verification system for PAS providers on January 3, 2021, as required by Section 12006(a) of the 21st Century CURES Act, passed by Congress in 2016. The EVV system electronically captured and verified provider visit information, and providers were required to submit claims to the Agency electronically through this application. We selected five provider payments for testing, and from there, one week of services submitted through the EVV system. A week of service billed by the provider may include multiple claims and clients. The Agency was unable to provide documentation from the EVV system of client signatures and the specific activities or tasks performed by the provider. Claim detail provided included the start and stop times and location of the visit, but there was no record of what tasks were provided on each day and for how long to ensure compliance with the SNA. Therefore, we questioned the entire claims initially selected for testing, resulting in questioned costs of $4,011. It should be noted these deficiencies were identified in the prior audit, and no enhancements have been made to the EVV system to address these issues. We also identified other issues with the billings submitted by each provider. Therefore, we reviewed additional claims submitted by the providers. We reviewed the claim information in NFOCUS that identified the total number of quarterly units billed each day. We noted the following issues with the five providers tested: Provider 1 The provider was authorized for up to 226 quarterly units or 56.5 hours of service per week. The provider billed and was paid for 25 hours of service on July 30, 2021, and for 24.5 hours of service on September 28, 2021. It is impossible for a provider to provide more than 24 hours of service in one day. The provider also billed for hours that exceeded the SNA limit for the claim tested and for an additional four weeks reviewed during the fiscal year. Below is a summary of the weeks that exceeded the SNA. See Schedule of Findings and Questioned Costs for chart/table. In addition to the services billed that exceeded the SNA, we also noted the provider was the client?s guardian and parent. Per CFR 42 ? 440.167, personal care services cannot be provided by a member of the individual?s family. A family member is defined as a legally responsible relative. The provider is a legally responsible relative of the client as the guardian and is not allowed to get paid for these services. The Nebraska Medicaid State Plan also states that services are provided by those who are not legally responsible relatives. Title 471 NAC 15-006.01A(3), effective through June 5, 2022, also stated that a legally responsible relative cannot provide services for the client. Therefore, all payments made during fiscal year 2022 are questioned. Along with the initial claim tested, the provider was paid an additional $20,944 that is not allowable. Provider #2 The provider was authorized 160 quarterly units or 40 hours of service per week. For the claim tested, the provider exceeded the SNA by 180 quarterly units or 45 hours. This included 24 hours of care billed on both October 20, 2021, and October 22, 2021. These hours were questioned above due to inadequate documentation. The provider exceeded the weekly authorized hours for 11 weeks reviewed and billed between 2 to 33.25 hours over the SNA each week, resulting in additional questioned costs of $980. We also noted that the provider worked full time at a public school during the school year; therefore, it is likely hours billed for PAS on weekdays overlap with time worked at the school. This provider was also noted as billing over the authorized limit during last year?s audit, and no overpayments were established and the overbilling has continued. Provider #3 The Agency authorized this provider to provide 486 quarterly units or 121.5 hours of service per week for four different clients. It is not reasonable to authorize this many hours of service for one provider, as it would take over 17 hours every day of the week in order to perform all the tasks noted on the SNA. For the week tested, the provider billed 476 quarterly units or 119 hours for the week. Each SNA of these clients included some services to be performed every day of the week. For one client, the provider billed a week of services on one day. As an example, 20 minutes for a bath or shower was authorized seven times for the week or once a day. It is not reasonable that seven baths or showers were provided on one day. For this same client, assistance with meal preparation was authorized three times per day for seven days. It is not reasonable that assistance with meal preparation was provided 21 times on one day. These claims were questioned above for inadequate documentation. We reviewed an additional two weeks of services, and the provider billed for tasks authorized for seven days per week but did not provide services each of the seven days a week for all clients. For example, if a client was authorized for a bath seven times for the week, but the provider performed services on only two days, we considered the hours charged for five baths to be overbilled. This resulted in additional questioned costs of $372. It should be noted that only these two weeks were reviewed, so there may be additional questioned costs for other weeks based on the frequency of tasks authorized. See Schedule of Findings and Questioned Costs for chart/table. The provider was also paid overtime hours for these two weeks. In addition to being overpaid due to billing for tasks that were not provided as authorized, the provider received overtime pay for this overbilling, resulting in an additional $183 in questioned costs. Providers are paid at time and one-half for services in excess of 40 hours each week. Per the Agency, there is a claims overtime team that reviews the service authorizations to ensure they are not exceeded. For the two weeks reviewed alone, the provider was paid for 78.45 and 63.27 hours of overtime. Provider 4 The provider was authorized 84 quarterly units or 21 hours for one client and 146 quarterly hours units or 36.50 hours per week for another. For the claims tested, the EVV claim detail supported the number of hours billed; however, six hours of service for one client was shown to be provided by another provider, and an additional two hours was shown as provided at the provider?s address. The claim was questioned above for inadequate documentation. We also noted that the incorrect rate was paid to the provider during all of fiscal year 2022, resulting in $22,800 additional questioned costs for fiscal year 2022. The agreement between the Agency and the provider could not be located in NFOCUS, and it was requested from the Agency on June 22, 2022, and was provided on June 29, 2022. Per a narrative in NFOCUS, the agreement was missing and was found in a file on a Resource Development worker?s laptop. The agreement was completed but not signed by the provider, so it was emailed to the provider, and the signed copy was returned on June 28, 2022. Per the agreement, the rate was $2.45 per quarterly unit or $9.80 per hour. This rate agrees to the quarterly hour rate for basic personal assistance care as of July 1, 2021, per Title 471 NAC 000-515. The rate for specialized personal assistance was $2.74 per quarterly hour as of July 1, 2021; however, no evidence was provided that the provider qualified for this rate. The provider?s agreement began on August 2, 2021. The following rates were paid: See Schedule of Findings and Questioned Costs for chart/table. Provider 5 This provider was authorized 584 quarterly units or 146 hours of service per week for four different clients. This is unreasonable as it would take over 20 hours every day of the week to perform all of the tasks noted on the SNA for all clients. The EVV claim detail supported the number of hours billed; however, the verification method noted ?NON? for each entry with manual edits. A provider who is manually entering visits in the provider portal through a computer can deny tracking of the location. Although the hours billed did not exceed the SNAs for the week tested, the provider billed 101.25 hours for the week with care up to 18 and 20 hours of service per day. This provider was tested during the prior-year audit with overlapping of services and billing over the SNA. We reviewed additional claims paid during the fiscal year. The provider overbilled 3.25 hours one week for a client with questioned costs of $22. The provider also billed over the SNA for a second client for 17 weeks from July 2021 through November 2021. This client was authorized to receive 79 quarterly units or 19.75 hours of service each week. The provider billed between 10.25 to 22.25 hours over the authorized hours, resulting in questioned costs of $2,019. We did not review the specific activities noted on the SNA and did not obtain actual time of services; therefore, there could be additional questioned costs for activities not performed according to the SNA. On November 5, 2021, during the PAS renewal, this second client told the Agency that the provider had not been in the client?s apartment in over a year. The service authorization for the client was open with the provider through December 4, 2021. Services were billed from June 2021 through November 22, 2021. Based on the client?s phone call with the Agency, the provider did not provide care from June 2021 through November 2021, so all those payments may be questionable. The provider was also paid overtime for most weeks that the provider overbilled for the two clients. As stated earlier, the overtime team reviews the claims paid and the service authorizations. It is evident the Agency was aware the provider was billing over the authorized hours for the two clients, because it only allowed overtime for hours provided or up to the maximum authorized hours, whichever was less, to be included in the weekly total. No overpayments were established for billing over the authorization for the two clients. Again, there could be additional questioned costs for overtime hours if the provider did not provide care for the second client from June 2021 through November 2021. Federal payment errors noted totaled $51,331. The Federal payments tested totaled $85,074, and the total Federal share of PAS payments for the fiscal year was $5,935,883. The total State share of PAS payments for the fiscal year was $3,462,220 for a total of $9,398,103. Due to the EVV system deficiencies, we consider all dollars to be at risk. Cause: Procedures were not adequate to prevent and/or detect errors. Effect: An inadequate review of PAS claims increases the risk of services provided not being in accordance with the recipient?s needs, as well as a risk of services being billed but not provided. There is a significant risk for fraud or abuse occurring and not being detected. State and Federal funds appear to have been misspent. Recommendation: We recommend the Agency implement procedures to ensure payments are allowable, adequately supported, and in accordance with State and Federal regulations. Management Response: The Agency agrees with the finding.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability and Eligibility Grant Number & Year: #2105NE5MAP, FFY21; #2205NE5MAP, FFY22 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: Per 45 CFR ? 75.303 (October 1, 2021): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Per 45 CFR ? 75.302(a) (October 1, 2021), ?Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state?s own funds.? 45 CFR ? 75.403(g) (October 1, 2021) requires costs to be adequately documented. Per 477 NAC 23-003.01: The total equity value of available non-excluded resources of the client . . . is determined and compared with the established maximum for available resources the client may own and still be considered eligible. If the total equity value of available non-excluded resources exceeds the established maximum, the client is ineligible. Per 477 NAC 23-003.05(A)(iii): A specified maximum may be disregarded if it is set aside for the purpose of paying burial expenses. Further, 477 NAC 23-003.05(A)(iii)(1)(b) states that for burial policies, ?If the client has irrevocably assigned more than the specified maximum in burial insurance, the excess is not an available resource but may be a deprivation of resources.? According to NAC Medicaid Eligibility Appendix 477-000-012, the maximum for a burial trust was $5,654, effective September 1, 2021. Per 477 NAC 23-003.10, the established maximum for available resources which a client may own and still be eligible is $4,000 for a one-member unit. Per 477 NAC 23-003.05(B)(v)(1)(a): The disregard of any motor vehicle is not allowed when it has been determined a client residing in a nursing home or an assisted living facility and receiving services through Home and Community Based Services or Programs or All-Inclusive Care for the Elderly does not intend, or will not be able to return home if medical transportation is included in the payment to the facility[.] Per 477 NAC 23-003.07(B)(ii)(1), ?Ownership of a motor vehicle is verified by the title. The number of individuals on the title legally determines the percentage of ownership.? 477 NAC 23-003.04(A) defines a ?deprivation of resources? as follows: Any action taken by the applicant or client, or any other person or entity, which reduces or eliminates the applicant?s, client?s, or spouse?s recorded ownership or control of the asset for less than fair market value is a deprivation of resources. The fair market value of a resource at the time the resource was disposed of must be verified and the equity value of the resource must be determined by taking into consideration any encumbrances against the resource. . . . 42 CFR ? 435.916(b) (October 1, 2021) requires the Agency to make a redetermination of eligibility in accordance with provisions of paragraph (a)(2) of that section, which states, ?The agency must make a redetermination of eligibility without requiring information from the individual if able to do so based on reliable information contained in the individual?s account or other more current information available to the agency, including but not limited to information accessed through any data bases accessed by the agency . . . .? A good internal control plan requires procedures to ensure that income and resources are updated for changes timely, adequately documented, and verified. Condition: The Agency did not adequately verify the income and resources of individuals residing in long-term care facilities to ensure that limits were not exceeded, and the individuals were eligible. A similar finding was noted in the prior audit. Repeat Finding: 2021-049 Questioned Costs: $5,368 known (#2205NE5MAP $4,848; COVID-19 #2205NE5MAP $520) Statistical Sample: No Context: We tested 25 long-term care facility payments and noted the following issues: ? One recipient?s budget from January 2020 through August 2022 was reduced by $65 for a dental insurance premium. However, the dental insurance policy was cancelled effective December 1, 2019, and no premiums were paid by the recipient. This resulted in an overpayment of $65, with a Federal share of $42 for the claim tested. ? For one recipient, the budget for February 2022 included the 2020 social security income amount of $873 rather than the 2022 social security income amount of $937, a variance of $64. This resulted in Federal share questioned costs of $41 for the claim tested. The budgets beginning October 2022 used the correct amount for calendar year 2022. ? For one recipient, the February 2022 budget was not updated with the 2022 social security income and pension amounts, resulting in an overpayment of $185, with a Federal share of $118. The Agency was unable to complete the Medicaid renewal process because requested verifications were not provided. Due to the COVID-19 Public Health Emergency, the case was not closed, and the renewal was extended for six months, and the prior income and resource amounts from 2021 were left in the budget. However, the social security income can be verified through the income and eligibility verification system (IEVS), and the budget could be updated with the correct income, causing an increase to the share of cost but not affecting overall eligibility. ? The April 2022 budget for one recipient included the incorrect amounts for the checking and savings bank accounts, resulting in the recipient being over the $4,000 resource limit by $3,228. The entire claim is questioned, resulting in Federal share sample questioned costs of $4,049. ? The budget for one recipient included two burial trusts for a total of $10,696. The Agency failed to obtain a copy of the burial contract to determine if there were countable assets related to this trust. Instead, the entire trust amounts were included in the recipient?s budget as a non-countable resource. Additionally, the resident trust account was not included as a resource. It is unknown if the recipient would have been under the $4,000 resource limit without this documentation; therefore, the claim is questioned, resulting in Federal share sample questioned costs of $1,074. ? Two providers billed the same day for one recipient. The recipient resided in an assisted living facility and was discharged on September 23, 2021, to a nursing facility. Both facilities were paid for services on September 24, 2021, resulting in non-sample Federal share questioned costs of $44. ? One recipient had title to eight vehicles that were not currently registered; however, none of these vehicles were included as resources. If the vehicles were still in the recipient?s possession, the value should have been included as an available resource, which may have affected Medicaid eligibility. The Agency failed to conduct an independent search for vehicles and consider their value as a potential resource if they were still in the recipient?s possession. Federal payment errors noted in the sample were $5,324. The total Federal sample tested was $103,839, and the total Federal long-term care facility expenditures during the fiscal year were $263,831,164. Based on the sample tested, the case error rate was 28% (7/25). The dollar error rate was 5.13% ($5,324/$263,831,164), which projects the potential dollars at risk for fiscal year 2022 to be $13,534,539 (dollar error rate multiplied by population). Cause: Worker error and inadequate review Effect: If income and resources are not adequately verified, there is an increased risk recipients will be inappropriately determined eligible for Medicaid or determined eligible with an incorrect share of cost. Recommendation: We recommend the Agency implement procedures to ensure all resources are identified, verified, and adequately documented. Management Response: The Agency partially agrees with the finding. The agency disagrees with several findings as the APA noted, the agency could not complete renewals on several of the cases due to not having received all of the required information. However, the APAs findings indicate they believe the agency should have run budgets with only partial information (e.g. social security income) included. Outside of the public health emergency, the agency would have closed these cases. However, due to the public health emergency, the cases must remain open and per policy guidance, the renewal date should be extended rather than completing a renewal with incomplete information. The agency agrees with the findings regarding the lack of verification on file or worker error in entering information into the system. APA Response: Six of the seven exceptions noted were due to worker error. For the recipient noted in the third bullet, the social security income should have been updated using IEVS, and the pension income could have been verified by calling Veterans? Affairs.
Program: AL 93.778 ? Medical Assistance Program; AL 93.778 ? COVID-19 Medical Assistance Program ? Allowability Grant Number & Year: #2105NE5MAP, FFY 2021; #2205NE5MAP, FFY 2022 Federal Grantor Agency: U.S. Department of Health and Human Services Criteria: 45 CFR ? 75.303(a) (October 1, 2021) requires the Agency to ?[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? Title 45 CFR ? 75.403(g) (October 1, 2021) requires costs to be adequately documented. The ? 1915(c) Home and Community-Based Services Waiver, effective October 1, 2020, through September 30, 2021, states, in part, the following: Individual programs must be specific and measurable and updated when not yielding progress, and data must be tracked and analyzed for trends. Monthly summary reports on progress or lack of progress must be made available upon request. Good internal control requires procedures to ensure that costs are in accordance with State and Federal requirements. Condition: We tested 25 claims paid from the Comprehensive Developmental Disability (CDD) Waiver and noted that two payments tested did not have adequate documentation. A similar finding was noted in the prior audit. Repeat Finding: 2021-052 Questioned Costs: $124 known See Schedule of Findings and Questioned Costs for chart/table. Statistical Sample: No Context: For two claims tested, we noted that monthly reporting of specific and measurable data used to analyze a recipient?s progress within the program was not on file or available upon request. Without such support we could not verify that proper services were provided. Federal payment errors for the sample tested were $124. The total Federal sample tested was $20,603, and the total of CDD payments for the fiscal year was $193,111,484. The dollar error rate for the sample was 0.60% ($124/$20,603), which estimates potential dollars at risk for fiscal year 2022 to be $1,158,669 (dollar error rate multiplied by population). Cause: Procedures were not adequate to ensure that monthly progress reports were properly completed and on file. Effect: Increased risk for unallowable charges and noncompliance with regulations. Recommendation: We recommend the Agency implement procedures to ensure that adequate documentation, including monthly progress reports, is maintained to support CDD payments. Management Response: The Agency agrees with the finding.
Program: AL 17.225 ? COVID-19 ? Unemployment Insurance ? Federal; AL 17.225 ? Unemployment Insurance ? State ? Allowability & Eligibility Grant Number & Year: FFY 2021 and FFY 2022 Federal Grantor Agency: U.S. Department of Labor Repeat Finding: 2021-054 Questioned Costs: $73,746 known (17.225 ? COVID19 ? UI ? FPUC Federal, $1,500; 17.225 ? COVID19 ? UI ? PUA Federal; $3,216; 17.225 ? UI ? State, $69,030) Statistical Sample: No Summary: Audit Finding 2022-013 included in Part II of this report, relates to both the financial statements and Federal awards. The APA performed a random sample of benefit payments and tested payments to State employees, inmates, individuals with high wages, and other payments. Our procedures revealed adjudication issues, improper payments to claimants, and other issues. The APA randomly selected 40 claimant benefit payments. The total sample tested was $19,579, and questioned costs for payments tested were $6,545. Total benefit payments for the fiscal year ended June 30, 2022, were $69,734,975. Based on the sample tested, the dollar error rate for the sample was 33.43% ($6,545/$19,579), which estimates the potential dollars at risk for fiscal year 2022 to be $23,312,402 (dollar error rate multiplied by population). We noted additional questioned costs during testing, totaling $67,201. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Recommendation: We recommend the Agency implement procedures to prevent the payment of improper unemployment compensation benefits. Those same procedures should also ensure compliance with State and Federal requirements, ensuring the following: 1) procedures are improved for identifying incarcerated individuals and identifying and assessing whether State employees are eligible for UI benefits; 2) employer responses to requests for separation information are adjudicated properly and followed up on; 3) investigations are created properly and completed in a timely manner; 4) benefit overpayments are established and recouped in a timely manner; and 5) verification of claimants? identity and employment or self-employment is performed properly and in a timely manner. Management Response: NDOL has multiple procedures in place to prevent and detect overpayments and conducts all crossmatches required by USDOL, including but not limited to the State and National Directories of New Hires and the Social Security Administration SSN, death and prisoner data bases. NDOL is meeting or exceeds federal requirements. The NCJIS prisoner crossmatch exceeds federal requirements. NCJIS records are supposed to contain all incarceration and release records for state and county correctional facilities. The one inmate in question was not listed as incarcerated in the SSA prisoner crossmatch and was reflected as released from incarceration in NCJIS records. The eligibility determination was based upon that NCJIS record. The state employee crossmatch is not federally required but is conducted as a best practice. NDOL will review the current state employee crossmatch process to determine if it is running as intended and whether adjustments to the process need to occur. Adjudicators are trained to review employer responses for separation in accordance with ETA Handbook 401, Edition 5. Adjudicator errors occur, but it is the result of human error rather than a systemic design flaw.
Program: AL 17.225 ? COVID-19 ? Unemployment Insurance ? Federal; AL 17.225 ? Unemployment Insurance ? State ? Allowability & Eligibility Grant Number & Year: FFY 2021 and FFY 2022 Federal Grantor Agency: U.S. Department of Labor Repeat Finding: 2021-054 Questioned Costs: $73,746 known (17.225 ? COVID19 ? UI ? FPUC Federal, $1,500; 17.225 ? COVID19 ? UI ? PUA Federal; $3,216; 17.225 ? UI ? State, $69,030) Statistical Sample: No Summary: Audit Finding 2022-013 included in Part II of this report, relates to both the financial statements and Federal awards. The APA performed a random sample of benefit payments and tested payments to State employees, inmates, individuals with high wages, and other payments. Our procedures revealed adjudication issues, improper payments to claimants, and other issues. The APA randomly selected 40 claimant benefit payments. The total sample tested was $19,579, and questioned costs for payments tested were $6,545. Total benefit payments for the fiscal year ended June 30, 2022, were $69,734,975. Based on the sample tested, the dollar error rate for the sample was 33.43% ($6,545/$19,579), which estimates the potential dollars at risk for fiscal year 2022 to be $23,312,402 (dollar error rate multiplied by population). We noted additional questioned costs during testing, totaling $67,201. A similar finding was noted in the prior audit. The Summary Schedule of Prior Audit Findings lists the status as completed. Recommendation: We recommend the Agency implement procedures to prevent the payment of improper unemployment compensation benefits. Those same procedures should also ensure compliance with State and Federal requirements, ensuring the following: 1) procedures are improved for identifying incarcerated individuals and identifying and assessing whether State employees are eligible for UI benefits; 2) employer responses to requests for separation information are adjudicated properly and followed up on; 3) investigations are created properly and completed in a timely manner; 4) benefit overpayments are established and recouped in a timely manner; and 5) verification of claimants? identity and employment or self-employment is performed properly and in a timely manner. Management Response: NDOL has multiple procedures in place to prevent and detect overpayments and conducts all crossmatches required by USDOL, including but not limited to the State and National Directories of New Hires and the Social Security Administration SSN, death and prisoner data bases. NDOL is meeting or exceeds federal requirements. The NCJIS prisoner crossmatch exceeds federal requirements. NCJIS records are supposed to contain all incarceration and release records for state and county correctional facilities. The one inmate in question was not listed as incarcerated in the SSA prisoner crossmatch and was reflected as released from incarceration in NCJIS records. The eligibility determination was based upon that NCJIS record. The state employee crossmatch is not federally required but is conducted as a best practice. NDOL will review the current state employee crossmatch process to determine if it is running as intended and whether adjustments to the process need to occur. Adjudicators are trained to review employer responses for separation in accordance with ETA Handbook 401, Edition 5. Adjudicator errors occur, but it is the result of human error rather than a systemic design flaw.
Program: AL 17.225 ? Unemployment Insurance ? Admin ? Special Tests & Provisions Grant Number & Year: UI-36202-21-60-A-31 grant period 1/1/2021 to 9/30/2022; UI-37991-22-60-A-31, grant period 1/1/2022 to 9/30/2023 Federal Grantor Agency: U.S. Department of Labor Criteria: Unemployment Insurance Program Letter (UIPL) 10-22 (January 21, 2022), Section 4.d., from the U.S. Department of Labor (USDOL) states the following, in relevant part: i. Required Engagement of UI Staff ? UI staff must be engaged in the administration of the RESEA program. This includes, but is not limited to: ? Participating in the planning, administration, and oversight of the RESEA program; * * * * ? Ensuring accurate data are provided in the RESEA-required reports[.] UIPL 10-22 also goes on to state, under section 4.d.v.B., the following: Performance reporting for FY 2022 consists of the ETA 9128, Reemployment and Eligibility Assessment Workload, and ETA 9129, Reemployment and Eligibility Assessments Outcomes; Office of Management and Budget (OMB) Control No. 1205-0456, expiration date 9/30/2022. . . . A state UI staff member must review these reports for accuracy each calendar quarter and prior to submission, in addition to being reviewed by the RESEA program lead (if a different staff member). The various grant agreements to which the State agreed state the following: In performing its responsibilities under this grant agreement, the awardee hereby certifies and assures that it will fully comply with all applicable Statute(s), and the following regulations and cost principles, including any subsequent amendments: Uniform Administrative Requirements, Cost Principles, and Audit Requirements: 2 CFR Part 200; Uniform Administrative Requirements, Cost Principles, and Audit Requirements[.] Additionally, per 2 CFR ? 2900.4 (January 1, 2022), the U.S. Department of Labor adopted the OMB Uniform Guidance as its policies and procedures for financial assistance administration. Per 2 CFR ? 200.514(c)(3) (January 1, 2022), we, as the auditors, must test controls. AICPA auditing standards require that, in designing and performing tests of controls, the auditor should obtain more persuasive audit evidence the greater the reliance the auditor places on the effectiveness of a control, and inquiry alone is not sufficient to test the operating effectiveness of controls. Condition: Documentation was not maintained to verify that Unemployment Insurance (UI) staff were reviewing all the quarterly Reemployment Services and Eligibility Assessments (RESEA) performance reports prior to submission. Repeat Finding: 2021-056 Questioned Costs: None Statistical Sample: No Context: The Agency has a process for a UI staff member and a RESEA staff member to review the quarterly RESEA performance reports prior to submission. However, documentation of UI staff?s review was not maintained for the following reports: ? 9128 report quarter ending 3/31/2022 ? 9129 report quarter ending 9/30/2021 ? 9129 report quarter ending 12/31/2021 ? 9129 report quarter ending 3/31/2022 Cause: The Agency?s UI staff did not document its review for all RESEA performance reports. Effect: When documentation is not maintained to support the review of RESEA performance reports, there is an increased risk that inaccurate reports will be submitted. Additionally, there is no evidence the Agency complied with Federal requirements to review the reports prior to submission. Recommendation: We recommend the Agency implement a documented review of the RESEA performance reports by UI staff to demonstrate such review was completed prior to the submission of the reports. Management Response: The process currently being used by NDOL is that UI staff submit the RESEA report. In the USDOL Final Determination for FY 2021, USDOL stated that: In response to the Initial Determination (ID), the SON stated they have moved their report submission to a UI Program Supervisor. The grantee?s UI Program Supervisor is responsible for submitting all Federal unemployment reports. Prior to submitting the report, the program supervisor reaches out to the impacted program supervisors to verify accuracy of the report. This is done via e-mail with a deadline response time provided. Specific to this report, verification is done through the above process with both UI and Reemployment Services supervisors prior to submission. Determination: Based on the above, ETA has determined the finding is corrected. APA Response: During fieldwork, we asked the Agency multiple times for documentation that the four reports referenced herein were reviewed by UI staff prior to being submitted, but no such support was provided for any of the reports.
Program: AL 17.225 ? Unemployment Insurance ? Admin ? Special Tests & Provisions Grant Number & Year: UI-35660-21-55-A-31, FFY 2021; UI-37235-22-55-A-31, FFY 2022 Federal Grantor Agency: U.S. Department of Labor Criteria: Per 2 CFR ? 2900.4 (January 1, 2022), the U.S. Department of Labor adopted the OMB Uniform Guidance as its policies and procedures for financial assistance administration. Per 2 CFR ? 200.303(a) (January 1, 2022), the non-Federal entity must do the following: Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in ?Standards for Internal Control in the Federal Government? issued by the Comptroller General of the United States or the ?Internal Control Integrated Framework?, issued by the Committed of Sponsoring Organizations of the Treadway Commission (COSO). Good internal controls require procedures to ensure that amounts owed are adequately tracked. Condition: We were not able to reconcile the subsidiary employer accounts with the State?s Unemployment Insurance (UI) general ledger control accounts. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: The Agency maintains accounts, or subsidiary ledgers, on State UI taxes received or due from individual employers and the UI Benefits charged to the employer. The Agency previously used the Tax Management System (TMS) to track employer accounts up to November 2021. Starting in December 2021, the Agency switched to the Geographic Solutions Unemployment System (GUS). The compliance supplement requires the auditor to reconcile, on a test basis, the subsidiary employer accounts with the State?s UI general ledger control accounts. Per the State?s Accounting system (EnterpriseOne), the Tax Contribution, Interest, and Penalties Receivable accounts were $3,587,459, $653,964, and $174,901. Only a report of the total Tax Contribution Receivables per the GUS system was provided, and the total per this report did not agree to the total Tax Contribution Receivables per EnterpriseOne. Therefore, we were unable to determine if the receivable amount in EnterpriseOne agreed to GUS, and we were unable to reconcile those subsidiary employer accounts with the State?s UI general ledger control accounts that had interest and/or penalties due. Cause: The Agency did not create a report for the total balance owed by employer when the new UI tax system was implemented. Effect: When there are not procedures to track amounts owed, there is an increased risk that amounts owed will not be collected. Recommendation: We recommend the Agency work with its vendor for the UI tax system to implement reports to track the amounts owed by employer. Management Response: The UI tax system currently tracks the amounts owed by individual employers and issues an ETA 581 report which lists aggregated employer liability data on quarterly basis. That aggregated data can be reviewed within the UI tax system on an employer, by employer basis. The Agency recognizes a desire for the Tax System to provide a specific report that can be run at any time and provide Tax Contribution Receivables. NDOL is working with the software vendor to provide additional employer liability reporting capabilities.
Program: AL 20.205 ? Highway Planning & Construction ? Subrecipient Monitoring Grant Number & Year: Various Federal Grantor Agency: U.S. Department of Transportation Criteria: Per 2 CFR ? 1201.1 (January 1, 2022), the U.S. Department of Transportation adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at Title 2 CFR part 200. 2 CFR ? 200.332(a) (January 1, 2022) requires all pass-through entities to do the following: Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification . . . . Required information includes: (1) Federal award identification. * * * * (ii) Subrecipient's unique entity identifier; (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; * * * * (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; * * * * (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; Good internal control requires procedure to ensure that subrecipients are informed of all required information. Condition: The Agency did not communicate all required information to subrecipients. We noted further that the Agency lacked procedures for ensuring subrecipients have sufficient accounting controls to manage Federal funds properly. Repeat Finding: No Questioned Costs: Unknown Statistical Sample: No Context: During the fiscal year, there were 46 subaward projects to a total of eight subrecipients. We tested five subawards and noted the Agency did not properly communicate the subrecipients? unique entity identifier, the Federal Award Identification Number, Federal award date, and amount of Federal funds obligated and committed for all five subrecipient projects tested. Additionally, for one of five projects tested, the Assistance Listing number and title was not communicated. Subrecipient expenditures totaled $29,277,795 during the fiscal year. Cause: The program agreement template used for subrecipient awards does not include all required Federal award identification data elements. For the one project where the Federal Assistance Listings number and title was not communicated, the program agreement was completed in 2006, prior to the program agreement template being changed to include this information. Effect: Noncompliance with Federal regulations could result in sanctions. When subrecipients are not informed of all required information, there is an increased risk for subrecipient noncompliance, including with audit requirements. Recommendation: We recommend the Agency implement procedures to ensure that subrecipient program agreements include all information required to be communicated. Management Response: NDOT concurs with finding and will review all current active agreements to ensure notification of each federal subaward is clearly identified to the subrecipient.
Program: AL 20.509 ? Formula Grants for Rural Areas ? Allowability & Subrecipient Monitoring Grant Number & Year: NE-2019-013-00, FFY 2017 Federal Grantor Agency: U.S. Department of Transportation Criteria: Per 2 CFR ? 1201.1 (January 1, 2022), the U.S. Department of Transportation adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at Title 2 CFR part 200. 2 CFR ? 200.403 (January 1, 2022) requires costs to be reasonable, necessary, and adequately documented. A good internal control plan requires procedures to be in place to ensure compliance with Federal and State requirements. 2 CFR ? 200.332(d) (January 1, 2022) requires the pass-through entity to do the following: 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. 2 CFR ? 200.430(i)(1) (January 1, 2022) states the following, in relevant part: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. These records must: (i) Be supported by a system of internal control which provides reasonable assurance that the charges are accurate, allowable, and properly allocated; * * * * (vii) Support the distribution of the employee?s salary or wages among specific activities or cost objectives if the employee works on more than one Federal award; a Federal award and non-Federal award; an indirect cost activity and a direct cost activity; two or more indirect activities which are allocated using different allocation bases; or an unallowable activity and a direct or indirect cost activity. (viii) Budget estimates (i.e., estimates determined before the services are performed) alone do not qualify as support for charges to Federal awards . . . [.] Per 2 CFR ? 200.405(a) (January 1, 2022), ?A cost is allocable to a particular Federal award or other cost objective if the goods or services involved are chargeable or assignable to that Federal award or cost objective in accordance with relative benefits received.? Condition: The Agency lacked adequate documentation to support that payments were for allowable activities and in accordance with Federal cost principles. A similar finding was noted in the prior audit. Repeat Finding: 2021-065 Questioned Costs: $64,704 known Statistical Sample: No Context: We tested 25 payments to 22 subrecipients and three vendors. The Agency performed financial desk reviews for subrecipients; however, the reviews tested were not adequate. When desk reviews were not adequate, we provided the Agency with the opportunity to obtain additional support from the subrecipient; however, adequate support was not obtained. We noted the following: ? For nine subrecipients tested, documentation was not adequate to support that personnel charges were allowable and in accordance with Federal cost principles. The Agency did not have timesheets, time certifications, or other payroll documentation on file for all reimbursement requests. In some cases, payroll documentation was on file, but there was not adequate support to verify that the correct amount was charged to the program, as timesheets were not sufficient to identify time allocated to the program when the employee did not work entirely on the Federal program. In addition, for some subrecipients there was not sufficient documentation to support the benefits reimbursed. ? For one subrecipient tested, fuel costs and maintenance expenses were not adequately supported. The expenses were not supported by invoices. ? For seven subrecipients tested, capital and nonoperating costs were not adequately supported. The Agency did not obtain documentation to support the percentage of nonoperating expenditures allocated to the program. Subrecipients may share building space with other city or county offices and, therefore, may be charged a portion of the rent and utilities. While this is allowable, the Agency must obtain documentation to support that the percent allocated to the transit program is reasonable; however, such supporting documentation was not available. We also noted that one subrecipient was improperly reimbursed for sales taxes. The sample population totaled $15,537,764, which included $12,810,135 paid to 60 subrecipients and $2,727,629 vendor payments. Federal payment errors noted in the sample totaled $24,600. The total Federal sample tested was $353,695. Based on the sample tested, the dollar error rate was 6.96% ($24,600/$353,695), which estimates the potential dollars at risk for fiscal year 2022 to be $1,081,428 (dollar error rate multiplied by population). North Fork Area Transit During the course of our audit, we became aware of potential fraud related to the North Fork Area Transit (NFAT), a subrecipient of the Agency. On December 15, 2022, the Director of NFAT was suspended. A warrant was issued for his arrest the next day, alleging theft of up to $1 million between April and December 2022. From April 1, 2022, through June 30, 2022, the Program reimbursed NFAT a total of $582,587. As a result, we selected the April 2022 reimbursement paid to NFAT in June 2022, totaling $101,519, for additional testing. During that testing we identified $40,104 in questioned costs due to the following: ? For all four non-operating personnel (director and managers), documentation was inadequate to support that personnel charges were allowable and in accordance with Federal cost principles, as the timesheets identified only times in and out and did not specify what work the nonoperating employee was performing for the Federal grant. Questioned costs due to the lack of support for nonoperating personnel totaled $24,104. ? A $20,000 payment for vehicle insurance was reported; however, there was no documentation to support how the amount was determined or why it was reasonable. Furthermore, the $20,000 paid was inconsistent with past vehicle insurance payments. We observed a check in March 2022 for $600 with the description that it was for March bus insurance, and previous testing identified $600 bus insurance checks in August 2020 and August 2021. As a result, we question the Federal share of $16,000. ? We also noted inconsistencies in supporting documentation for operating personnel (drivers and dispatchers). Variances were noted between timesheet hours and the payroll register. Due to the NFAT concerns, the APA has now commenced a thorough review of this entire matter, which will be reported separately at a later date. Cause: Procedures were not adequate to ensure that costs were in accordance with Federal requirements. Effect: Increased risk for errors or misuse of funds. Recommendation: We recommend the Agency strengthen subrecipient monitoring procedures. We further recommend the Agency improve procedures to ensure expenditures are allowable and in accordance with Federal regulations. Management Response: The NDOT Local Assistance Division has increased transit staff by 1.5 FTEs for a total of 3.5 FTEs dedicated to reviewing monthly invoices. NDOT continues to engage and educate transit recipients. In late 2022, the North Fork Area Transit (NFAT) Board began an internal review process which revealed an inappropriate use of funds and authorities were notified. In December 2022, the NFAT Board engaged NDOT and requested assistance from the Mobility Management Team following the allegation. The Mobility Management Team is assisting the NFAT Board in managing operations, review of existing reporting and financial policies, and review and update of step-by-step checks and balances process. NDOT is financially supporting the Mobility Management Team in an effort to support and resume services at NFAT.
Program: AL 20.933 ? National Infrastructure Investments ? Reporting Grant Number & Year: 693JJ22040000BDG3NE5009003, Period ending September 5, 2023; 693JJ22040000BDG0NE0752128, Period ending February 1, 2024 Federal Grantor Agency: U. S. Department of Transportation Criteria: Per 2 CFR ? 1201.1 (January 1, 2022), the U.S. Department of Transportation adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at Title 2 CFR part 200. 2 CFR ? 200.302(a) (January 1, 2022) states the following: Each state must expend and account for the Federal award in accordance with state laws and procedures for expending and accounting for the state's own funds. In addition, the state's and the other non-Federal entity's financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. 2 CFR ? 170 (January 1, 2022), Appendix A, Section I, Reporting Subawards and Executive Compensation, states, in relevant part, the following: (a) Reporting of first-tier subawards. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that equals or exceeds $30,000 in Federal funds for a subaward to a non-Federal entity or Federal agency . . . . * * * * (2) Where and when to report. (i) The non-Federal entity or Federal agency must report each obligating action described in paragraph a.1. of this award term to http://www.fsrs.gov. (ii) For subaward information, report no later than the end of the month following the month in which the obligation was made. Good internal control requires procedures to ensure that Federal reports are complete, accurate, and submitted as required. Condition: Both the quarterly financial reports and the Federal Funding Accountability and Transparency Act (FFATA) report were inaccurate. A similar finding was noted in the prior audit. Repeat Finding: 2021-066 Questioned Costs: N/A Statistical Sample: No Context: The Agency is required to file quarterly SF-425 Financial Reports for each open project. We noted the following: ? The Agency did not complete the cash receipts, cash disbursements, and cash on hand sections for the quarters ended September 30, 2021, and December 31, 2021, for projects 21209 and 22277. In addition, Federal funds authorized and Federal share of expenditures were not completed for project 22277 for these same two quarters. ? We noted the following errors for the 21209 quarterly report ended March 31, 2022. See Schedule of Findings and Questioned Costs for chart/table. ? The June 30, 2022, quarterly report for project 21209 reported $0 cash disbursements and $5,529,176 cash on hand. These line items should have been reversed, with $5,529,176 reported as cash disbursements. The $5,529,176 was correctly reported as the Federal share of expenditures. During the fiscal year, the Agency had one subrecipient that required FFATA reporting. One of seven Key Data Elements tested was not reported accurately. The amount of the subaward was $16,960,000; however, that amount was reported incorrectly as $16,960. Cause: Employee error and inadequate review procedures. Effect: Noncompliance with Federal requirements, which could lead to sanctions. Recommendation: We recommend the Agency improve procedures to ensure expenditures are reported properly and agree to accounting records. We further recommend the Agency improve procedures to ensure FFATA reporting is accurate. Management Response: The FY21 Statewide Single Report was issued on June 23, 2022. Upon receipt of the findings, NDOT took action to implement changes to the quarterly SF-425 Report. The Key Data Element noted as being inaccurately reported as $16,960 is a number automatically generated by the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). A federal system, not a state system. The federal funding of $16,960,000 was accurately reflected in other areas of the report. NDOT concurs with the adjustments and will review procedures to ensure accurate FFATA reporting. APA Response: It is the Agency?s responsibility to ensure that all data reported is accurate. While the grant award of $16,960,000 was identified on the report, the subaward of $16,960,000 was incorrectly reported as $16,960. If the Agency is aware that key data elements are incorrect, the Agency should make the necessary changes so the subaward amount is accurate. In response to our testing, Agency staff indicated they went back into the system and were able to adjust the numbers.
Program: AL 21.023 ? COVID-19 Emergency Rental Assistance ? Allowability & Earmarking Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200. 2 CFR ? 200.403 (January 1, 2022) states, in relevant part, the following: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. (b) Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items. 2 CFR ? 200.404 (January 1, 2022) states the following: A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. The question of reasonableness is particularly important when the non-Federal entity is predominantly federally-funded. In determining reasonableness of a given cost, consideration must be given to: (a) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the non-Federal entity or the proper and efficient performance of the Federal award. (b) The restraints or requirements imposed by such factors as: sound business practices; arm?s-length bargaining; Federal, state, local, tribal, and other laws and regulations; and terms and conditions of the Federal award. (c) Market prices for comparable goods or services for the geographic area. (d) Whether the individuals concerned acted with prudence in the circumstances considering their responsibilities to the non-Federal entity, its employees, where applicable its students or membership, the public at large, and the Federal Government. (e) Whether the non-Federal entity significantly deviates from its established practices and policies regarding the incurrence of costs, which may unjustifiably increase the Federal award?s cost. 2 CFR ? 200.459 (January 1, 2022) states, in relevant part, the following: (a) Costs of professional and consultant services rendered by persons who are members of a particular profession or possess a special skill, and who are not officers or employees of the non-Federal entity, are allowable, subject to paragraphs (b) and (c) of this section when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the Federal Government. . . . (b) In determining the allowability of costs in a particular case, no single factor or any special combination of factors is necessarily determinative. However, the following factors are relevant: (1) The nature and scope of the service rendered in relation to the service required. * * * * (6) Whether the service can be performed more economically by direct employment rather than contracting. (7) The qualifications of the individual or concern rendering the service and the customary fees charged, especially on non-federally funded activities. (8) Adequacy of the contractual agreement for the service (e.g., description of the service, estimate of time required, rate of compensation, and termination provisions). Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(c)(2)(A) of the Consolidated Appropriations Act, 2021, states, in relevant part: Not less than 90 percent of the funds received by an eligible grantee from a payment made under this section shall be used to provide financial assistance to eligible households . . . . Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(c)(3) of the Consolidated Appropriations Act, 2021, states, in relevant part: Not more than 10 percent of funds received by an eligible grantee from a payment made under this section may be used to provide eligible households with case management and other services related to the novel coronavirus disease (COVID-19) outbreak, as defined by the Secretary, intended to help keep households stably housed. Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(c)(5)(A) of the Consolidated Appropriations Act, 2021, states, in relevant part: Not more than 10 percent of the amount paid to an eligible grantee under this section may be used for administrative costs attributable to providing financial assistance and housing stability services under paragraphs (2) and (3), respectively, including for data collection and reporting requirements related to such funds. Per the amended Emergency Rental Assistance terms, dated March 26, 2021, ?The total of all administrative costs, whether direct or indirect costs, may not exceed 10 percent of the total amount of the total award.? The Reallocation Guidance from the U.S. Department of the Treasury (Treasury), dated March 30, 2022, states the following: A Grantee may spend up to 10% of its initial ERA1 allocation for administrative expenses only if the Grantee obligates at least 30% of its initial allocation for the provision of financial assistance and housing stability services on behalf of eligible households by September 30, 2022. If a Grantee has obligated less than 30% of its initial allocation providing financial assistance and housing stability services as of September 30, 2022, Treasury will presume that the Grantee?s administrative expenses were not attributable to such services ? and therefore were not permissible uses of ERA1 funds ? to the extent that the administrative expenses exceed 10% of the Grantee?s allocation after deducting amounts recaptured or reallocated as excess funds, unless the Grantee can demonstrate that those costs are related to the delivery of the program. Condition: The contractual agreement to receive and evaluate applications for Emergency Rental Assistance (ERA) did not have adequate limitations or provisions to ensure costs were reasonable. A similar finding was noted in the prior audit. Repeat Finding: 2021-063 Questioned Costs: $3,580,007 known Statistical Sample: No Context: The State of Nebraska was initially awarded $158,572,581 for ERA to assist eligible households that have difficulty making timely payments of rent and utilities due to the COVID-19 pandemic. At least 90% of funds are to be earmarked for financial aid to eligible households. Not more than 10% of funds may be used for administrative costs. The Agency entered into a contract with Deloitte & Touche LLP (Deloitte) to provide program administration and case management. Eligibility determinations were made by Deloitte and then sent to the State for review and to process the aid payments to eligible recipients. Deloitte was paid $8,672,561 during the fiscal year ended June 30, 2022. We tested one payment for $531,314 and noted the following: ? Adequate support was not on file to allow for a determination as to whether the contracted amount was reasonable. There were no maximums or limitations other than the $14,627,160 cap specified in the contract. The contract was paid on an hourly rate and did not have any stipulations regarding the number of hours paid per application or performance measures to be achieved. ? Per guidance from Treasury, if the State obligates less than 30% of its initial allocation providing financial aid by September 30, 2022, Treasury will presume that the State?s administrative expenses were not attributable to the program, at least to the extent that the administrative expenses exceed 10% of the Grantee?s allocation after deducting amounts recaptured or reallocated as excess funds. The State voluntarily reallocated $84,700,000 to local governments and was required to return an additional $11,716,548 for reallocation. Therefore, State administrative expenses would be limited to $6,215,603 (10% of awarded amount less reallocations). Administrative expenses in fiscal year 2021 and 2022 totaled $9,795,610. As a result, we question costs of $3,580,007 for administrative costs exceeding 10%. As of January 17, 2023, the Agency has spent $26,399,517 on financial aid, and $13,080,572 for administrative expenses, of which $12,563,227 was paid to Deloitte. This is 33.13% of the total amount paid as of January 17, 2023. Without spending 30% of its award on financial aid, the Agency will not meet the earmarking requirements per the guidance released from Treasury. Based on the amount of financial aid spent, the administrative costs appear unreasonable. Cause: The contract was not competitively bid, and contract provisions were not specific enough to ensure that amounts paid were reasonable. The Agency lacked adequate procedures to ensure adherence to earmarking requirements. Effect: Without such adequate procedures, there is an increased risk for misuse of Federal funds. The Agency did not meet earmarking requirements. Recommendation: We recommend the Agency improve its procedures for ensuring the reasonableness of contractual service payments. Management Response: The Military Department does not agree with this finding. Vendor Contract: The State performed procurement procedures soliciting Requests for Information from vendors in 2020 to support COVID-19 related tasks. A contractual agreement was completed with the vendor once the State determined the program costs, estimated level-of-effort, and key assumptions were reasonable based on the scope of services the State requested. In addition, the state complied with the procurement standards set forth in 2 CFR 200.317-200.327, including expected contract provisions, key program assumptions, and not-to-exceed thresholds. The contractual agreement was completed to enable the State to proactively monitor vendor performance and analyze detailed information on associated cost. Vendor performance was monitored through twice-weekly status meetings, bi-weekly executive status briefings with executives across multiple agencies, bi-weekly Executive Steering Committee meetings, and review of detailed invoices. The State as the Grantee is able to demonstrate that the administrative costs are related to the delivery of the program in a timely fashion and is aligned with US Treasury Guidance. APA Response: As of January 17, 2023, the Agency has spent $1 in administration costs for every $2 spent for aid. This does not appear reasonable and is not in accordance with earmarking requirements. Thus, in addition to the questioned administrative costs identified for 2022, the agency appears to be on track for incurring millions of dollars more in such questioned costs for 2023.
Program: AL 21.023 ? COVID-19 Emergency Rental Assistance ? Allowability & Eligibility Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200. 2 CFR ? 200.303 (January 1, 2022) states, in relevant part, the following: The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. . . . Good internal controls require risk assessments to be performed, and procedures to verify the validity of applicants prior to payment. 2 CFR ? 200.403 (January 1, 2022) states, in part: Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards: (a) Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles. * * * * (g) Be adequately documented. The Nebraska ERA Program FAQ states, ?Who is eligible? You are eligible if you answer YES to ALL of the following: . . .Your landlord is not an immediate family member.? Division N ? Additional Coronavirus Response and Relief, Title V ? Banking, Section 501(k)(3)(A) of the Consolidated Appropriations Act, 2021, states that an eligible household is a household of one or more individuals that is obligated to pay rent on a residential dwelling. Good internal controls require procedures to verify the validity of applicants prior to payment. Condition: Procedures were not adequate to ensure that payments were allowable, and individuals were eligible for assistance. A similar finding was noted in the prior audit. Repeat Finding: 2021-064 Questioned Costs: $76,050 known Statistical Sample: No Context: During testing of 40 aid payments, we noted one payment, totaling $1,350, made to an applicant whose landlord was an immediate relative. The total sample tested was $87,526, and total assistance payments for the fiscal year were $17,456,087. The dollar error rate for the sample was 1.54% ($1,350/$87,526), which estimates the potential dollars at risk for fiscal year 2022 to be $268,824 (dollar rate multiplied by the population.) In the prior and current audit, we noted that the Agency identified likely fraudulent payments. As of January 9, 2023, the Agency had identified $155,360 and $822,188 of likely fraudulent payments in fiscal years ended June 30, 2021, and June 30, 2022, respectively. We reviewed five of these payments, totaling $74,700, in fiscal year 2022. For all five payments, we noted indicators of possible fraud, as information on the application provided was inconsistent with the information from other databases or systems. Examples of such indicators include the following: 1) the owner of the property per the County Assessors website not agreeing to the owner listed on the application; 2) generic and editable supporting documentation; and 3) tenants and landlords having out-of-state identification and telephone numbers. According to the Agency, these payments have been referred to the State Patrol for further investigation. Cause: The Agency had various procedures for ensuring that application information was accurate; however, verifying the property owner to County Assessor information was not required. Effect: There is an increased risk for fraudulent payments. Once fraudulent payments have been made, the likelihood of recouping them is low. Recommendation: We recommend the Agency improve its procedures for verifying the validity of applicants prior to payments. We further recommend the Agency continue to work with law enforcement to recoup improper payments. Management Response: The Military Department does not agree with this finding. The State has implemented a strong system of internal controls to determine program eligibility. These controls include detailed pre-payment and post-payment analytics to help identify applications at risk for fraud. As the ERA program progressed in Nebraska and nationally, program procedures continued to be enhanced to monitor for and prevent potentially fraudulent applications. During its life the program provided proactive fraud detection for over 56,000 tenant and landlord applications and prevented approximately $23M of funding from being paid out erroneously. Additionally, the State turns over any paid applications that have been subsequently determined at risk of being fraudulent to the State Patrol for further investigation and potential prosecution. APA Response: In addition to the one of 40 payments tested with errors, five payments we reviewed noted possible indications of fraud. Once fraudulent payments have been made, the likelihood of recouping them is low. 2 CFR ? 200.516 (January 1, 2022) requires reporting known or likely fraud affecting a Federal award.
Program: AL 21.023 ? COVID-19 Emergency Rental Assistance ? Reporting Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost principles, and Audit Requirements set forth at 2 CFR part 200. 2 CFR ? 200.302(a) (January 1, 2022) states, in relevant part, the following: [T]he state?s and the other non-Federal entity?s financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit the preparation of reports required by general and program-specific terms and conditions; and the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award. Per the Treasury Emergency Rental Assistance (ERA) Quarterly Reporting Special Tip, issued on January 24, 2022, ?[A]mounts returned to Treasury, whether excess funds or voluntary reallocation, should be excluded from reporting since the funds are no longer available for obligation or expenditure.? A good internal control plan requires procedures to ensure that all required data is reported and documented and does not include excluded amounts. Condition: The Agency did not correctly report Cumulative Obligations to Date and Cumulative Expenditures to Date on the ERA Compliance Report for quarter ending June 30, 2022. Repeat Finding: No Questioned Costs: None Statistical Sample: No Context: The Cumulative Obligations to Date and Cumulative Expenditures to Date reported on the ERA Compliance Report for quarter ending June 30, 2022, were $137,087,293 and $127,949,502, respectively. The amounts reported included the $96,416,548 that had been returned to the U.S. Department of the Treasury for voluntary reallocation and excess funds. However, per the guidance issued by the U.S. Department of the Treasury on January 24, 2022, the $96,416,548 should have been excluded from the report. Cause: Employee oversight. Effect: The Cumulative Obligations to Date and Cumulative Expenditures to Date on the ERA compliance report for quarter ending June 30, 2022, were overstated. Recommendation: We recommend the Agency improve procedures to ensure reports are accurate. Management Response: The Military Department agrees with this finding. The State?s ERAP award could not be used to provide assistance to individuals residing in Omaha, Lincoln, Lancaster County, or Douglas County as those political subdivisions received separate ERAP awards. With the largest need being in those metropolitan areas of the State, $84.7 million was obligated to those communities through the Treasury reallocation process. An additional $11.7 million was paid back to U.S. Treasury as part of a recapture process. Those amounts were shown as cumulative obligations against the initial award of $158.5 million until the award amount was formally adjusted down by U.S. Treasury.
Program: AL 21.026 ? COVID-19 Homeowner Assistance Fund ? Allowability & Eligibility Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200. U.S. Department of the Treasury Homeowner Assistance Fund Guidance states the following, in relevant part: HAF participants must have a reasonable basis under the circumstances for determining income for purposes of the requirements described above under ?Eligible Homeowners.? Two approaches for income verification are permissible: (1) the household may provide a written attestation as to household income together with supporting documentation?or (2) the household may provide a written attestation as to household income and the HAF participant may use a reasonable fact-specific proxy for household income, such as reliance on data regarding average incomes in the household?s geographic area. The Financial Assistance Agreement states that Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, as set out in 2 C.F.R. Part 200, are applicable to the award. Per 2 CFR ? 200.303 (January 1, 2022): The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. Good internal control requires procedures to ensure that participants are eligible and payments are proper. Condition: The Agency did not have adequate procedures to ensure that payments were allowable, and participants were eligible for assistance. Repeat Finding: No Questioned Costs: $981 known Statistical Sample: No Context: We tested 25 assistance payments. One $981 payment tested did not include the co-applicant. The applicant noted his marital status as married; however, the application was signed only by one individual, and the income verification review was performed only for the applicant and did not include the income of the spouse. The total sample tested was $116,341, and total assistance payments for the fiscal year were $5,015,888. Based on the sample tested, the case error rate was 4% (1/25). The dollar error rate for the sample was 0.84% ($981/$116,341), which estimates the potential dollars at risk for fiscal year 2022 to be $42,133 (dollar rate multiplied by the population.) Cause: Staff errors and inadequate review. Effect: Increased risk for errors or fraud. Recommendation: We recommend the Agency improve procedures for ensuring that applications are properly completed and reviewed, and eligibility requirements are met. Management Response: The Military Department agrees with this finding. Management agrees the spouse should have been added to the application, income verification completed for the spouse, and no letter of explanation was provided for excluding the spouse. However, adding the spouse?s name and income would not have changed the award decision.
Program: AL 21.026 ? COVID-19 Homeowner Assistance Fund ? Subrecipient Monitoring Grant Number & Year: N/A Federal Grantor Agency: U.S. Department of the Treasury Criteria: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200. 2 CFR ? 200.332 (January 1, 2022) states the following, in relevant part: All pass through entities must: (a) Ensure that every subaward is clearly identified to the subrecipient as a subaward and includes the following information at the time of the subaward and if any of these data elements change, include the changes in subsequent subaward modification. When some of this information is not available, the pass-through entity must provide the best information available to describe the Federal award and subaward. Required information includes: (1) Federal award identification (i) Subrecipient name (which must match the name associated with its unique entity identifier); (ii) Subrecipient?s unique entity identifier (iii) Federal Award Identification Number (FAIN); (iv) Federal Award Date (see the definition of Federal award date in ? 200.1 of this part) of award to the recipient by the Federal agency; (v) Subaward Period of Performance Start and End Date; (vi) Subaward Budget Period Start and End Date; (vii) Amount of Federal Funds Obligated by this action by the pass-through entity to the subrecipient; (viii) Total Amount of Federal Funds Obligated to the subrecipient by the pass-through entity including the current financial obligation; (ix) Total Amount of the Federal Award committed to the subrecipient by the pass-through entity; (x) Federal award project description, as required to be responsive to the Federal Funding Accountability and Transparency Act (FFATA); (xi) Name of Federal awarding agency, pass-through entity, and contact information for awarding official of the Pass-through entity; (xii) Assistance Listings number and Title; the pass-through entity must identify the dollar amount made available under each Federal award and the Assistance Listings Number at time of disbursement; (xiii) Identification of whether the award is R&D; and (xiv) Indirect cost rate for the Federal award (including if the de minimis rate is charged) per ? 200.414. * * * * (d) Monitor the activities of the subrecipient as necessary to ensure that the subaward is used for authorized purposes, in compliance with Federal statutes, regulations, and the terms and conditions of the subaward; and that subaward performance goals are achieved. 2 CFR ? 200.333 (January 1, 2022) states the following: With prior written approval from the Federal awarding agency, a pass-through entity may provide subawards based on fixed amounts up to the Simplified Acquisition Threshold, provided that the subawards meet the requirements for fixed amount awards in ?200.201. 2 CFR ? 200.201 (January 1, 2022) states the following, in relevant part: (b) Fixed amount awards. In addition to the options described in paragraph (a) of this section, Federal awarding agencies, or pass-through entities as permitted in ? 200.333, may use fixed amount awards (see Fixed amount awards in ? 200.1) to which the following conditions apply: (1) The Federal award amount is negotiated using the cost principles (or other pricing information) as a guide. The Federal awarding agency or pass-through entity may use fixed amount awards if the project scope has measurable goals and objectives and if adequate cost, historical, or unit pricing data is available to establish a fixed amount award based on a reasonable estimate of actual cost. . . . Good internal controls require procedures for the proper maintenance of program documents. Condition: The Agency lacked adequate procedures for monitoring subrecipients. Repeat Finding: No Questioned Costs: $451,851 known Statistical Sample: No Context: On November 2, 2021, the Agency signed a Memorandum of Understanding (MOU) with the Nebraska Investment Finance Authority (NIFA) to assist the Agency in carrying out the Homeowner Assistance Fund (HAF) Program. The Agency agreed to pay NIFA an amount not to exceed $1,200,000 for services during the initial contract period of November 1, 2021, through January 31, 2023. This included: 1) a flat fee of $78,348 for delivery of an accepted HAF Plan; 2) a flat fee of $90,700 for implementation of the Program, payable the month following program launch; and 3) $69,081 per month, beginning February 2022, for ongoing project administration. During the fiscal year ended June 30, 2022, the Agency paid NIFA $451,581. We noted the following: ? The Agency did not have controls and procedures in place to ensure that subrecipient requirements were met. ? The Agency did not communicate the Federal award identification items required by 2 CFR ? 200.332. ? NIFA was to be paid fixed amounts; however, prior written approval of these fixed-amount payments, as required by 2 CFR ? 200.333, could not be provided. In addition, the Agency did not have adequate support to ensure that the amounts paid were reasonable, as required by 2 CFR ? 200.201. Furthermore, per an Employee Time Summary report, the actual cost for February through June 2022 was $152,301, compared to the $345,404 billed and paid for monthly services. Cause: Inadequate procedures. Effect: Increased risk of fraud and non-compliance with Federal guidelines. Recommendation: We recommend the Agency implement procedures to ensure that Federal guidelines are followed, and controls are in place for subrecipient monitoring. Management Response: The Military Department disagrees with this finding. The Military Department does require NIFA to comply with 2 CFR 200 and executes procedures and controls to ensure the Federal guidelines are followed. These include (but are not limited to) weekly program updates, monthly reporting of plan metrics, compliance reviews, monthly manpower evaluations of NIFA personnel against invoices to substantiate project management supporting the program and reasonableness of administration fees. In addition, the MOU with NIFA was amended to require monthly manpower evaluations to substantiate the monthly fee for project management and administration of the program beginning with July 2022 invoicing, thus changing from a flat fee to actual costs incurred. APA Response: Per 2 CFR ? 1000.10 (January 1, 2022), the U.S. Department of the Treasury adopted the Uniform Administrative Requirements, Cost Principles, and Audit Requirements set forth at 2 CFR part 200; therefore, the Agency is required to follow 2 CFR part 200. Payments during fiscal year ended June 30, 2022, were made under a fixed amount subaward. Fixed amount subawards are allowable only with prior written approval from the Federal awarding agency. The failure to communicate items required by 2 CFR ? 200.332 (January 1, 2022) illustrates further the inadequacy of Agency procedures.
Program: AL 21.027 ? COVID-19 ? Coronavirus State and Local Fiscal Recovery Funds ? Allowability Grant Number & Year: NA Federal Grantor Agency: U.S. Department of the Treasury Repeat Finding: No Questioned Costs: $12,392,009 known Statistical Sample: No Summary: Audit Finding 2022-007, included in Part II of this report, relates to both the financial statements and Federal awards. In June 2022, the Department of Corrections (NDCS) performed journal entries, moving payroll costs of $20,395,464 from the State General Fund to the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) grant. The transfer included an $8 per hour wage increase for Corrections Corporals, Sergeants, and Unit Caseworkers. The transfer also included overtime, shift differential, and on-call hours for all staff. The amount for overtime, shift differential, and on-call hours was not in accordance with Federal regulations for SLFRF, which allows only for the portion of employee?s time spent responding to COVID-19, and was not in accordance with Legislative Bill 1014 (April 13, 2022). Section 12 of LB 1014 states that the funds are ?related to premium pay for Public Health and Public Safety positions as a result of COVID-19 conditions . . . .? Unallowable costs totaled $12,392,009 ($20,395,464 less premium pay allowed of $8,003,455). Recommendation: We recommend NDCS implement procedures to ensure that Legislative Bills and Federal regulations are adhered to. Management Response: As indicated in an email to the APA dated December 2, 2022, NDCS does not agree with the APA's finding regarding overtime, shift differential and on-call hours. NDCS believes these are allowable expenses under the federal regulations for CSLFRF and the Final Rule. COVID conditions resulted in significant vacancies in NDCS' facilities. Mandatory overtime was necessary for the majority of staff, especially those who had direct contact with inmates. This included those who provided medical/mental health, food service and other services to inmates, as well as those who oversaw administrative and support roles. Daily staffing decisions/assessments were made to maintain safe and secure operations for inmates, team members and the public at all times, since these facilities require staffing 24/7/365. Further, NDCS submitted additional documentation to the APA for the $8 wage increase incurred during FY 2023. As indicated by APA, the $8 wage increase was an allowable expense. As referenced in the information sent to the APA, under State of Nebraska accounting policies and procedures, any federal funds received in a prior fiscal year carryover into the next fiscal year. We remain confident the documentation submitted by NDCS meets federal regulations. APA Response: The ?Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule,? issued by the U.S. Department of the Treasury (Department) in January 2022, states clearly, on page 26 thereof, the following: SLFRF funding may be used for payroll and covered benefits for public safety, public health, health care, human services and similar employees of a recipient government, for the portion of the employee?s time spent responding to COVID-19. (Emphasis added.) Likewise, on page 27 of that same document, the following reiteration is provided: SLFRF funding may be used for payroll and covered benefits for the portion of the employees? time spent on COVID-19 response, as calculated above, through the period of performance. (Emphasis added.) As noted in audit finding 2022-007, moreover, page 4385 of the Final Rule contains the following: At the same time, many public health and safety workers perform roles unrelated to COVID?19; coverage of all roles would be overbroad compared to the workers responding to COVID?19 in actuality. For this reason, the final rule maintains the interim final rule?s approach to permitting SLFRF funds to be used for public health and safety staff primarily dedicated to responding to COVID?19. (Emphasis added.) Despite these explicit and unambiguous directives, NDCS attempts to defend its questioned expenditure of SLFRF funds by stating, ?All public safety workers are presumed to have worked in a COVID capacity.? In addition to risking precisely the type of ?overbroad? coverage warned against, such an outlook flies in the face of the Final Rule?s requirement that a proper allocation of SLFRF funds must be based upon a periodic documented assessment showing that any employee or unit/division receiving such grant monies has been ?primarily dedicated? to responding to COVID-19. This is explained in detail on page 4384 of the Final Rule, which includes the following: Recipients are generally required to be able to support uses of SLFRF funds as eligible, including, in this instance, maintenance of records to support an assessment that public health and safety staff are primarily dedicated to responding to COVID?19. (Emphasis added.) An unsubstantiated presumption, such as that relied upon by NDCS, is insufficient to meet this plain requirement. Furthermore, we noted that overtime, shift differential, and on-call hours paid during the six-month period prior to the pandemic were almost indistinguishable from those paid during the pandemic; this indicates that the staffing issues faced by NDCS were not caused primarily by COVID-19. The APA did not test documentation related to FY2023 that was received subsequent to our testing of the FY2022 transactions. State policies do allow for carryover of General Fund appropriations with certain restrictions; however, State policies do not allow for the charging of expenditures prior to the date of the obligation. FY2023 wages were not an allowable FY2022 expenditure per State or Federal policies.