Finding Number 2024-051 Subject Heading (Financial) or AL no. and program name (Federal) 93.658 - LIHEAP Planned Corrective Action The Oklahoma Department of Human Services (OKDHS) concurs that improvements were needed to strengthen certain automated payment processing controls, system edits, and su...
Finding Number 2024-051 Subject Heading (Financial) or AL no. and program name (Federal) 93.658 - LIHEAP Planned Corrective Action The Oklahoma Department of Human Services (OKDHS) concurs that improvements were needed to strengthen certain automated payment processing controls, system edits, and supervisory review procedures within the LIHEAP program. The Agency agrees with the specific payment processing errors identified during audit testing related to cooling overpayments, ECAP payment limits, duplicate payments, and preauthorization system logic. Corrective actions, including system modifications, policy clarification, staff coaching, enhanced supervisory oversight, and improvements to payment validation processes, have been implemented or are in progress to reduce the risk of recurrence. The Agency notes, however, that this finding combines several distinct issues—including isolated payment processing errors, temporary administration of LIHWAP and LIHEAP supplemental benefits, reporting limitations associated with legacy system functionality, and recommendations regarding future system design—into a single conclusion regarding the adequacy of internal controls. While each of these issues warrants evaluation and appropriate corrective action, they represent different types of control considerations and should not be viewed as resulting from a single underlying control deficiency. During implementation of LIHWAP and subsequent LIHEAP supplemental payments, OKDHS utilized its existing eligibility infrastructure to administer multiple federally authorized funding streams. This approach was consistent with congressional direction encouraging states, to the extent practicable, to utilize existing systems, processes, and procedures when implementing the temporary LIHWAP program. While this approach allowed the Agency to efficiently deliver emergency assistance, the Agency acknowledges that utilizing common payment coding across multiple temporary funding streams reduced reporting clarity and complicated downstream financial reporting and audit analytics. The Agency further notes that the majority of the questioned costs identified in this finding resulted from payment processing logic, temporary system configuration changes, or automated system edits rather than deficiencies in the underlying eligibility determination process. Accordingly, corrective actions have appropriately focused on strengthening payment validation, automated system edits, duplicate payment prevention, and preauthorization controls while continuing to reinforce supervisory review of eligibility determinations. The Agency agrees that improvements to payment coding, reporting architecture, and reconciliation capabilities would strengthen the overall control environment and has already initiated broader modernization efforts in these areas. These efforts extend beyond the recommendations contained in this finding and are intended to improve financial reporting, reconciliation, program transparency, and overall governance while supporting long-term administration of LIHEAP and other assistance programs. The Agency respectfully disagrees that the reporting limitations identified by the auditors, standing alone, demonstrate an overall failure of eligibility or payment authorization controls. While the Agency acknowledges the payment processing errors identified elsewhere in this finding, the lack of distinct payment identifiers primarily affected reporting, reconciliation, and audit analytics rather than the Agency's ability to accurately determine eligibility for the vast majority of transactions reviewed. The finding itself demonstrates that both the Agency and the auditors were ultimately able to distinguish between LIHEAP, LIHWAP, and supplemental payments through available program documentation when evaluating the sampled transactions. Accordingly, the Agency believes the identified system limitation is more appropriately characterized as a reporting and system design issue than evidence that the underlying eligibility control framework was ineffective. The Agency also respectfully disagrees that creation of additional payment identifiers is the only means of achieving compliance with federal internal control requirements. Federal internal control standards require reasonable assurance that federal funds are properly administered, but they do not prescribe a specific system architecture or require a particular reporting structure. While distinct payment identifiers would improve reporting efficiency and facilitate financial reconciliation and audit analytics, the Agency does not believe the absence of those identifiers, by itself, constitutes a compliance deficiency. Since the audit period, the Agency has undertaken broader improvements extending beyond the specific recommendations contained in this finding. These efforts include strengthening automated payment processing controls, restoring and enhancing system edits, improving reporting architecture, expanding financial reconciliation capabilities, reinforcing supervisory oversight, and improving overall program governance. Collectively, these initiatives are intended to establish a stronger and more sustainable internal control framework while improving the Agency's ability to administer multiple funding streams and provide more transparent financial reporting. Accordingly, the Agency concurs that certain payment processing controls, automated system edits, and related supervisory controls required strengthening and has implemented corrective actions addressing those issues. However, the Agency respectfully disagrees that the reporting limitations identified in this finding, standing alone, demonstrate an overall failure of LIHEAP eligibility controls or establish that implementation of distinct payment identifiers is the only means of achieving reasonable assurance over program administration. Anticipated Completion Date In progress Responsible Contact Person Kayla Urtz