Corrective Action Plans

Finding 410387 (2022-007)

Significant Deficiency 2022

IL

Allowable Costs / Cost Principles § 200.303

Finding 2022-007Federal Agency Name: Department of Health and Human ServicesProgram Name: COVID-19 Provider Relief Fund and American Rescue Plan (ARP} Rural DistributionFederal Financial Assistance Listing #93.498Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Princi...

Finding 2022-007Federal Agency Name: Department of Health and Human ServicesProgram Name: COVID-19 Provider Relief Fund and American Rescue Plan (ARP} Rural DistributionFederal Financial Assistance Listing #93.498Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost PrinciplesFinding Summary: The Hospital's final expenditure listing claimed payroll costs by certain departments that worked directly with COVID patients. The general ledger report that this information was generated from reports the information by department, however the payroll register does not have departmental data. Therefore, the general ledger report was not able to tie to specific department information, but it was able to tie in total.Responsible Individuals: Jennifer Venable, CFOCorrective Action Plan: Management agrees with the finding. The reporting options in the Hospital's legacy payroll system were limited. With the new system implemented in November 2021, the reports are more robust which provide the detail by department by employee. Subsequent reporting will have reports that clearly break down the detail necessary.Anticipated Completion Date: January 25, 2023

View Audit 311964

Finding 410385 (2022-006)

Material Weakness 2022

Washington County Hospital

IL

Allowable Costs / Cost Principles Material Weakness Reporting § 200.303

Finding 2022-006Federal Agency Name: Department of Health and Human ServicesProgram Name: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionFederal Financial Assistance Listing #93.498Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Princi...

Finding 2022-006Federal Agency Name: Department of Health and Human ServicesProgram Name: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionFederal Financial Assistance Listing #93.498Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and ReportingFinding Summary: There was no evidence of formal review and approval over tracking of expenditures that were claimed for the program. In addition, there was no evidence retained that the Hospital's special report submitted to the Department of Health and Human Services for Period 1 TIN #376020408 was reviewed or approved by an individual separate from the preparer prior to submission. The approval for individual payroll and fringe benefit expenditures was not retained in the transition to a new payroll software, and certain other expenditures did not have retained approval.Responsible Individuals: Jennifer Venable, CFOCorrective Action Plan: Management agrees with the finding. In subsequent reporting a formal approval by the CEO will be kept as part of the reporting documentation. This will include both the expenditure tracking documentation as well as the report itself. Payroll approval occurs within the payroll system. Approval logs will be retained as part of the record keeping workflow going forward .Anticipated Completion Date: January 25, 2023

View Audit 311964

Finding 410383 (2022-005)

Material Weakness 2022

Washington County Hospital

IL

Allowable Costs / Cost Principles Material Weakness Reporting § 200.303

Finding 2022-005Federal Agency Name: Department of Health and Human ServicesProgram Name: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionFederal Financial Assistance Listing #93.498Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Princi...

Finding 2022-005Federal Agency Name: Department of Health and Human ServicesProgram Name: COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionFederal Financial Assistance Listing #93.498Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Cost Principles and ReportingFinding Summary: The Hospital claimed expenses that were incurred prior to when the Hospital began to prepare for, prevent and respond to the coronavirus. The Hospital also claimed expenses within "Other PRF Expenses" that were funded by other sources. The Hospital offset these other funding sources in later periods out of the "Other Unreimbursed Expenses". This resulted in the incorrect categorization of expenses on the special report submitted to the Department of Health and Human Services (HHS) for Period 1 which caused the report to be inaccurate.Responsible Individuals: Jennifer Venable, CFOCorrective Action Plan: Management agrees with the finding. In subsequent reporting expenses will be categorized appropriately and consideration given to align the receipt of other funding sources with the reporting of expenses within the same quarter.Anticipated Completion Date: January 25, 2023

View Audit 311964

Finding 410371 (2022-003)

Significant Deficiency 2022

Alamo Area Resource Center, Inc.

TX

Subrecipient Monitoring Matching / Level of Effort / Earmarking Internal Control / Segregation of Duties § 200.303

Finding 2022-003EligibilityManagement Response: Management agrees with auditor recommendations and a plan is in place to increase the effectiveness of reviews to ensure the completeness of client certification requirements.Action Plan: 1) Identify the departments that had eligibility errors. 2) Prov...

Finding 2022-003EligibilityManagement Response: Management agrees with auditor recommendations and a plan is in place to increase the effectiveness of reviews to ensure the completeness of client certification requirements.Action Plan: 1) Identify the departments that had eligibility errors. 2) Provide comprehensive training to ensure a clear understanding of Ryan White eligibility requirements among departments.Enacted: June 2023Responsible Person: Director of Case ManagementFinalized: July 2023Action Plan: 3) The programs use a new platform, e2SanAntonio, that has a built-in feature that flags clients that are out of compliance. Will perform monthly audits of Ryan White eligibility using the new eligibility platform reporting.Enacted: April 2023Responsible Person: Director of Case ManagementFinalized: June 2023

View Audit 311961

Finding 410369 (2022-004)

Significant Deficiency 2022

Jenkins Living Center, Inc.

SD

Procurement, Suspension & Debarment Allowable Costs / Cost Principles Significant Deficiency § 200.303

Finding 2022-004Federal Agency Name: Department of Health and Human ServicesProgram Name: COVID 19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionFederal Financial Assistance Listing #93.498Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Costs Princ...

Finding 2022-004Federal Agency Name: Department of Health and Human ServicesProgram Name: COVID 19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionFederal Financial Assistance Listing #93.498Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Costs PrinciplesFinding Summary: An invoice was claimed that was duplicated on the COVID-19 capital items claimed under equipment.Responsible Individuals: Loren Diekman, Interim President/CEOCorrective Action Plan: We will enhance our internal control policies to ensure COVID-19 equipment purchases are eligible and properly recorded in the reports required to be submitted to the federal agency.Anticipated Completion Date: March 31, 2023

View Audit 311960

Finding 410368 (2022-003)

Material Weakness 2022

Jenkins Living Center, Inc.

SD

Allowable Costs / Cost Principles Cash Management Material Weakness § 200.303

Finding 2022-003Federal Agency Name: Department of Health and Human ServicesProgram Name: COVID 19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionFederal Financial Assistance Listing #93.498Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Costs Princ...

Finding 2022-003Federal Agency Name: Department of Health and Human ServicesProgram Name: COVID 19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionFederal Financial Assistance Listing #93.498Compliance Requirement: Activities Allowed or Unallowed and Allowable Costs/Costs PrinciplesFinding Summary: Our special report submitted to the Department of Health and Human Services for Period 1 and 2 for TIN #460242831 did not have the formal documentation of a secondary review or approval. Our lost revenue calculation was based on actual revenue billed and reported within our financial software. It was found that we had immaterial unexplained variances in the Period 1 report. In addition, we did not consider the impact of the retroactive Medicaid reimbursement adjustment applicable to quarter 3 and 4 of 2021 on the Period 2 report.Responsible Individuals: Loren Diekman, Interim President/CEOCorrective Action Plan: We will enhance the review process over special reports and ensure the lost revenue calculation when applicable will include any retro Medicaid reimbursement adjustments.Anticipated Completion Date: March 31, 2023

View Audit 311960

Finding 410362 (2022-002)

Material Weakness 2022

Recovery Innovations, Inc.

AZ

Allowable Costs / Cost Principles Internal Control / Segregation of Duties Material Weakness § 200.303

2022-002 Department of Health and Human ServicesFederal Financial Assistance Listing #93.498COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionApplicable Federal Award Number and Year ? Period 2 and Period 3 TIN #711018775Activities Allowed or Unallowed and Allowable Cost...

2022-002 Department of Health and Human ServicesFederal Financial Assistance Listing #93.498COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural DistributionApplicable Federal Award Number and Year ? Period 2 and Period 3 TIN #711018775Activities Allowed or Unallowed and Allowable Costs/Cost PrinciplesMaterial Weakness in Internal Control Over ComplianceReportingMaterial Weakness in Internal Control Over Compliance and Material NoncomplianceCondition: There was a lack of review and approval over Period 2 Provider Relief Funds lost revenue calculation and reporting. For Period 2 and Period 3, the Organization?s lostrevenue calculation did not take into consideration applicable audit adjustments for fiscal years 2021 and 2022. In addition, the Period 2 lost revenue on the Special Report to HHS did not agree to the supporting documentation.Cause: The Organization did not have an internal control process in place to ensure review and approval of the lost revenue calculation claimed under the federal program and the report submitted to the Department of Health and Human Services (HHS) for Period 2. In addition, without the inclusion of the audit adjustments, the revenue included in Period 2 and Period 3 was not materially correct.Management?s Response and Corrective Action Plan:Management placed an internal control process prior to review done for period 3 and approved the lost revenue calculation prior to submittal to the Department of Health and Human Services (HHS).Responsible Individuals: VP of Finance and Administration.Anticipated Completion Date: 1/1/2023

View Audit 311958

Finding 410072 (2022-004)

Significant Deficiency 2022

University of Delaware

DE

Questioned Costs Allowable Costs / Cost Principles Matching / Level of Effort / Earmarking § 200.101 § 200.303 § 200.6

Corrective Action PlanYear Ended June 30, 2022Finding 2022-004: AllowabilityCondition Found:In the auditors? testing over allowability of cost, they identified one transaction in a sample of 40 non-payroll transactions for which the University paid and allocated the cost, however, the service contra...

Corrective Action PlanYear Ended June 30, 2022Finding 2022-004: AllowabilityCondition Found:In the auditors? testing over allowability of cost, they identified one transaction in a sample of 40 non-payroll transactions for which the University paid and allocated the cost, however, the service contract period had not yet started. In addition, the auditors identified a second transaction for an intergovernmental personnel agreement (in the same sample of 40 non-payroll transactions) which included an advance on future service.Recommendation:The auditors recommend the University enhance the level of precision around its internal control over compliance related to the timing of allocating and charges costs.University of Delaware Corrective Action Plan:The University agrees with this finding. The questioned costs will be removed from the grant charged. Additionally, the University will provide additional education and awareness over the billing of federal awards to ensure that expenses relate to the period being billed and services being performed.Anticipated Completion Date:July 2023Contact Person:Jeff Friedland, Associate Vice President for Research

View Audit 311956 Questioned Costs: $1

Finding 409887 (2022-003)

Significant Deficiency 2022

University of Delaware

DE

Procurement, Suspension & Debarment Subrecipient Monitoring § 200.303

Corrective Action PlanYear Ended June 30, 2022Finding 2022-003: Procurement: Suspended and DebarredCondition Found:In the auditor?s testing over suspension and debarment, they identified nine covered transactions in a sample of 40 procurement transactions for which the University was unable to prov...

Corrective Action PlanYear Ended June 30, 2022Finding 2022-003: Procurement: Suspended and DebarredCondition Found:In the auditor?s testing over suspension and debarment, they identified nine covered transactions in a sample of 40 procurement transactions for which the University was unable to provide supporting documentation that we verified the vendor was not suspended or debarred prior to entering into the procurement transaction with the vendor. It was determined that the related vendors were not suspended or debarred.Recommendation:The auditors recommend the University enhance its internal control over compliance with the federal regulations related to suspension and debarment to ensure covered transactions are not entered into with parties that have been suspended or debarred.University of Delaware Corrective Action Plan:The University agrees with the finding. The University will ensure suspension and debarment language is included within the contracts of all new covered transactions effective July 1, 2023 and thereafter.Additionally, the University will investigate utilizing third-party verification software to screen existing and potential vendors against the System for Award Management (SAM.gov) Exclusions list daily with expected execution by July 1, 2024.Anticipated Completion Date:Suspension and Debarment: Contract Clause ? July 1, 2023Suspension and Debarment: SAM.gov Verification ? July 1, 2024Contact Persons:Jeff Friedland, Associate Vice President for ResearchDavid Fenkel, Associate Vice President & Chief Procurement Officer

View Audit 311956

Finding 409882 (2022-002)

Significant Deficiency 2022

University of Delaware

DE

Equipment & Real Property Management § 200.303 § 200.313

Corrective Action PlanYear Ended June 30, 2022Finding 2022-002: EquipmentCondition Found:The University did not complete its physical inventory counts for 10 departments out of the 15 sampled University departments. The University has a total of 70 departments monitoring federal equipment. In addit...

Corrective Action PlanYear Ended June 30, 2022Finding 2022-002: EquipmentCondition Found:The University did not complete its physical inventory counts for 10 departments out of the 15 sampled University departments. The University has a total of 70 departments monitoring federal equipment. In addition, for one item in our sample of 40 physical inspections, we noted the property was not appropriately tagged for identification.Recommendation:The auditors recommend the University enhance its internal control over compliance around establishing property records of newly acquired federally funded equipment in accordance with applicable Federal regulations and completing the necessary physical inventories and reconciliations.University of Delaware Corrective Action Plan:The University agrees with the finding and will strengthen processes including unit and senior leadership accountability around the tagging and surveying of federally funded equipment. The University will implement management and escalation procedures with executive leadership to ensure that accountability for all completed surveys resides with the senior leader. The entire process is being evaluated and controls will be enhanced where needed and training will be expanded to include the importance of timely compliance.Anticipated Completion Date:June 2023Contact Person:Lisa Marra Kelly, Controller, Controller?s Office

View Audit 311956

Finding 406049 (2022-001)

Significant Deficiency 2022

Eastwest Food Rescue

WA

Allowable Costs / Cost Principles Subrecipient Monitoring Significant Deficiency § 200.303

EastWest Food Rescue has since implemented a formal expense approval process that requires electronic signatures from authorized individuals before payments will be processed.

View Audit 311592

Finding 403903 (2022-003)

Material Weakness 2022

Aerospace MacHinists Joint Training Committee

WA

Allowable Costs / Cost Principles Internal Control / Segregation of Duties § 200.303

Corrective Action Plan: The deficiencies related to internal control policies and procedures were initially identified in a Federal Desk Monitoring Review conducted in November 2022. Internal control policies and procedures were updated in response to these findings and approved by DOL on October 26...

Corrective Action Plan: The deficiencies related to internal control policies and procedures were initially identified in a Federal Desk Monitoring Review conducted in November 2022. Internal control policies and procedures were updated in response to these findings and approved by DOL on October 26, 2023. All policies and procedures related to federal grant agreement compliance will be reviewed and updated on an annual basis by AJAC Directors and Supervisors. Anticipated Completion Date: Completed

View Audit 310790

Finding 403889 (2022-003)

Significant Deficiency 2022

West Alabama Aids Outreach, Inc.

AL

Questioned Costs Subrecipient Monitoring Internal Control / Segregation of Duties § 200.303

Since completion of the fiscal year ended 9/30/2022, the Organization has added a Director of Grants Management, two grant billers and a purchasing manager to help ensure policies and procedures are being followed. In response to this finding, the CFO and Director of Grants Management have institute...

Since completion of the fiscal year ended 9/30/2022, the Organization has added a Director of Grants Management, two grant billers and a purchasing manager to help ensure policies and procedures are being followed. In response to this finding, the CFO and Director of Grants Management have instituted multiple internal processes to confirm administrative fees do not exceed 10% of grant award. The grant biller will prepare a monthly reimbursement schedule in Excel which shows the budgeted amount for each category. The Director of Grants Management reviews and approves this schedule to ensure it meets the grant requirements. Each individual monthly reimbursement form is approved and signed by the Director of Grants Management to confirm accuracy. Then the reimbursement form submitted is entered in a master spreadsheet "Projects by Line Item" which shows original budget, monthly amounts billed for each budget line item, and remaining balance for each item. This is reviewed each month to ensure no amounts, including the administrative costs exceed approved amounts. Anticipated Completion Date: 9/30/2023 Responsible Contact Person: Chris White, CFO

View Audit 310763 Questioned Costs: $1

Finding 403888 (2022-002)

Significant Deficiency 2022

West Alabama Aids Outreach, Inc.

AL

Subrecipient Monitoring Allowable Costs / Cost Principles Cash Management § 200.303

The CFO has instituted multiple approvals for each reimbursement or purchase request. Since completion of the fiscal year ended 9/30/2022, the Organization has added a Director of Grants Management, two grant billers, and a purchasing manager to help ensure policies and procedures are being followe...

The CFO has instituted multiple approvals for each reimbursement or purchase request. Since completion of the fiscal year ended 9/30/2022, the Organization has added a Director of Grants Management, two grant billers, and a purchasing manager to help ensure policies and procedures are being followed. For reimbursements, employees will complete an Employee Reimbursement Form which is signed by the employee and employee's direct supervisor. For purchase requests, employees will complete a Purchase Order form which is signed by the employee and the employee's supervisor. The signed form is sent to the finance department where it is entered in Bill.com for payment by accounts payable personnel. The Director of Finance approves the reimbursement or purchase on Bill.com, then the CFO approves and releases for payment. The approved Reimbursement Form or Purchase Order is sent to the Director of Grants Management, and if eligible, attached to the monthly billing to grantor for reimbursement. Anticipated Completion Date: 9/30/2023 Responsible Contact Person: Chris White, CFO

View Audit 310763

Finding 403822 (2022-007)

Significant Deficiency 2022

Jft Recovery and Veterans Support Services

PA

Procurement, Suspension & Debarment Allowable Costs / Cost Principles Cash Management § 200.302 § 200.303 § 200.318 § 200.319 § 200.430

Policies will be placed and adopted by the agency that meet the UG code. These policies will be placed in the fiscal manual. The fiscal manual will be created by using federal guidelines and by using the DDAP fiscal manual as guidance.

View Audit 310733

Finding 403121 (2022-012)

Material Weakness 2022

State of California

CA

Internal Control / Segregation of Duties Special Tests & Provisions Allowable Costs / Cost Principles § 200.303

Public Health agrees that Form CMS-1539 should be signed. We are exploring reasons why so many forms were not signed, and we will work with our District office management to ensure that they are all signed going forward. Further, we will address this issue at our next meeting of District Managers, ...

Public Health agrees that Form CMS-1539 should be signed. We are exploring reasons why so many forms were not signed, and we will work with our District office management to ensure that they are all signed going forward. Further, we will address this issue at our next meeting of District Managers, District Administrators, and Health Facilities Evaluator Supervisors, and will work to update our training materials as necessary. Finally, we will also explore periodically pulling a sample of completed CMS-1539 forms to verify that signatures are present. Estimated Implementation Date: May 1, 2024 Contact: Elizabeth Moreno, Section Chief Business Operation Section Center for Health Care Quality, Office of Internal Operations California Department of Public Health

View Audit 310237

Finding 403120 (2022-011)

Material Weakness 2022

State of California

CA

Subrecipient Monitoring § 200.303 § 200.332 § 200.501 § 200.513 § 200.521

Public Health’s Center for Preparedness and Response (CPR) agrees that it did not establish a formal risk assessment process over its subrecipients of ELC COVID-19 awards. CPR will establish and document formal procedures for conducting risk assessments of ELC subrecipients. Public Health will also...

Public Health’s Center for Preparedness and Response (CPR) agrees that it did not establish a formal risk assessment process over its subrecipients of ELC COVID-19 awards. CPR will establish and document formal procedures for conducting risk assessments of ELC subrecipients. Public Health will also develop and implement specific subrecipient monitoring procedures. CPR also agrees that it did not obtain single audit reports from ELC subrecipients. CPR will develop and implement procedures outlining the process for obtaining single audit reports from subrecipients, which will include a monitoring mechanism to track compliance with the single audit mandate. Estimated Implementation Date: December 2024 Contact: Melissa Relles, Assistant Deputy Director Division of Operations Center for Preparedness and Response California Department of Public Health

View Audit 310237

Finding 403119 (2022-010)

Material Weakness 2022

State of California

CA

Eligibility Internal Control / Segregation of Duties Procurement, Suspension & Debarment § 200.303

Public Health’s Office of Aids (OA) agrees with the finding and recommendation. OA developed and implemented additional internal quality assurance (QA) processes in April of 2022 to ensure that secondary reviews of AIDS Drug Assistance Program (ADAP) applications are consistently enforcing the exist...

Public Health’s Office of Aids (OA) agrees with the finding and recommendation. OA developed and implemented additional internal quality assurance (QA) processes in April of 2022 to ensure that secondary reviews of AIDS Drug Assistance Program (ADAP) applications are consistently enforcing the existing guidelines, including acceptable supporting documentation and accurate eligibility requirements. Prior to this audit period, and through December 2021, ADAP had issued multiple policy memos to respond to the COVID-19 pandemic, which enabled staff and enrollment workers to defer documentation collection, when necessary, to remain flexible and ensure clients impacted by the pandemic, and associated site closures, did not lose eligibility and access to life-saving medications and comprehensive healthcare. These flexibilities in our guidelines were implemented based on guidance received from our federal funder, the Health Resources and Services Administration, which encouraged ADAP to reassess its organization's eligibility and recertification policies and procedures, and remove any barriers that may impede social distancing, or other public health strategies, necessary to minimize COVID-19 transmission. This documentation deferral was terminated on December 31, 2021, and since January 1, 2022, full documentation and eligibility requirements have been enforced. This, combined with ongoing QA efforts, will help mitigate future findings in ADAP applications. Estimated Implementation Date: Implemented as of April 2022 Contact: Joseph Lagrama, Branch Chief AIDS Drug Assistance Program Branch California Department of Public Health

View Audit 310237

Finding 403118 (2022-009)

Material Weakness 2022

State of California

CA

Allowable Costs / Cost Principles Material Weakness Matching / Level of Effort / Earmarking § 200.303

The Behavioral Health Administrative support team will endeavor to ensure that timesheets are collected and submitted appropriately. As the payroll system (SCO) and leave accounting (HRIS) are two completely separate programs that do not interact, the Behavioral Health (BH) Administrative Support T...

The Behavioral Health Administrative support team will endeavor to ensure that timesheets are collected and submitted appropriately. As the payroll system (SCO) and leave accounting (HRIS) are two completely separate programs that do not interact, the Behavioral Health (BH) Administrative Support Team will maintain a master file detailing the funding information for each position. For example, if a position is funded by two different grants, the file would reflect the percentage of work associated with each. It must be noted that as employee leave is tracked and maintained in a separate system, the Absence and Additional Time Worked Reports (STD 634) only reflect hours worked and leave used and does not reflect how a position is funded. Additionally, staff who are in Work Week Group E and are exempt from coverage under the Fair Labor Standards Act (FLSA) are not required to document hours worked for payroll purposes. Therefore, this form would only reflect leave credits used in whole-day increments. This means that on their timesheets, you will only find time used to cover full-day leave usage. These are generally our Supervisors and Managers. Estimated Implementation Date: July 2024 Contact: Raberta Gannon, Chief Behavioral Health Administrative Support Services Section Deputy Diretor’s Office, Behavioral Health California Department of Health Care Services

View Audit 310237

Finding 403116 (2022-008)

Material Weakness 2022

State of California

CA

Subrecipient Monitoring Allowable Costs / Cost Principles Internal Control / Segregation of Duties § 200.303

The Local Governmental Financing Division, in collaboration with the Audits and Investigations Division, agrees that policies and procedures will be developed to take additional action for significantly late-cost reports and non-compliant counties. As of July 1, 2023, the California Department of He...

The Local Governmental Financing Division, in collaboration with the Audits and Investigations Division, agrees that policies and procedures will be developed to take additional action for significantly late-cost reports and non-compliant counties. As of July 1, 2023, the California Department of Health Care Services transitioned counties away from cost reconciliation financing, and for any state fiscal year after July 1, 2023, counties will no longer be required to submit cost reports. Estimated Implementation Date: July 2023 Contact: Wendy Griffe, Chief Internal Audits California Department of Health Care Services

View Audit 310237

Finding 403115 (2022-007)

Material Weakness 2022

State of California

CA

Allowable Costs / Cost Principles Material Weakness Reporting § 200.303

California received $27 billion in State Fiscal Recovery Funds (SFRF) under the American Rescue Plan Act of 2021 to cover costs and mitigate the impacts of the COVID-19 pandemic. States that lost revenue due to the pandemic are permitted to use an amount of SFRF equivalent to their lost revenue, as ...

California received $27 billion in State Fiscal Recovery Funds (SFRF) under the American Rescue Plan Act of 2021 to cover costs and mitigate the impacts of the COVID-19 pandemic. States that lost revenue due to the pandemic are permitted to use an amount of SFRF equivalent to their lost revenue, as calculated pursuant to the U.S. Treasury’s Final Rule, to fund government services. The Department of Finance (Finance) acknowledges that its established review processes did not detect the inclusion of state employee contributions to deferred compensation plans in its revenue loss calculation and that these contributions did not constitute eligible revenue codes as they were not reported as revenues in the state’s basic financial statements. Due to unclear federal guidance, Finance’s original analysis and screening questions accounted for revenue codes that constituted revenues to the state from a budgetary perspective. Finance agrees that this oversight is a material weakness and has since adjusted its approach to the revenue loss calculation by excluding revenue codes that do not constitute revenues from a financial statement accounting perspective. However, Finance maintains that its overall controls and calculation process is sound and disagrees that this oversight was categorized as a material noncompliance finding. As stated in the finding, the overstated revenue loss amount did not impact expenditures reported for fiscal year 2022, and corrective action was taken before this finding and the state’s annual comprehensive financial report were released. The overstated revenue loss amount of $977,898,160 was not transferred from Fund 8506, which was established for the administration of the State Fiscal Recovery Funds received from the federal government, and was not used for the provision of government services. Estimated Implementation Date: January 2024 Contact: Mary Halterman, Assistant Program Budget Manager Federal Funds Cost Tracking & Accountability Unit California Department of Finance

View Audit 310237

Finding 403113 (2022-006)

Material Weakness 2022

State of California

CA

Questioned Costs Eligibility Reporting § 200.303

The EDD resumed adjudicating all potential eligibility issues as of January 2021 and completed the retroactive determination workload on April 30, 2023. Estimated Implementation Date: April 2023 Contact: Diane Underwood, Division Chief Unemployment Insurance Branch California Em...

The EDD resumed adjudicating all potential eligibility issues as of January 2021 and completed the retroactive determination workload on April 30, 2023. Estimated Implementation Date: April 2023 Contact: Diane Underwood, Division Chief Unemployment Insurance Branch California Employment Development Department

View Audit 310237 Questioned Costs: $1

Finding 403111 (2022-005)

Material Weakness 2022

State of California

CA

Questioned Costs Internal Control / Segregation of Duties Allowable Costs / Cost Principles § 200.303

Given the unprecedented volume of unemployment insurance claims during the federal disaster—approximately 20 million claims compared to 3.8 million during the Great Recession—EDD took action to speed payments to eligible claimants whenever possible. For example, EDD launched in July 2021 a Condition...

Given the unprecedented volume of unemployment insurance claims during the federal disaster—approximately 20 million claims compared to 3.8 million during the Great Recession—EDD took action to speed payments to eligible claimants whenever possible. For example, EDD launched in July 2021 a Conditional Payment Program to speed payments to claimants who certified for benefits and already received at least one week of benefits in the past but whose payments were later pending for more than two weeks. EDD also boosted its capacity to process workloads, prioritized timely payments, and employed automation among other measures. As reported in Reference Number 2020-006 in fiscal year 2019-2020, EDD began automatically cross-matching EDD wage records and Franchise Tax Board records in November 2020 to assist in verifying the income of PUA claimants who could not be automatically verified through these procedures. Such claimants were required to submit additional documentation to EDD for a manual review. Regarding the manual processing of the income documents to substantiate the PUA weekly benefit amounts that have been increased above the minimum California WBA of $167, and the verification of employment or self-employment substantiation (known in California as “Self-employment/Employment Substantiation” or “SEES”), on February 6, 2024, in accordance with the U.S. Department of Labor (DOL) Unemployment Insurance Program Letter 05-24, the California Employment Development Department (EDD) identified that the processing of PUA income documents and the SEES workloads must be considered resolved due to California’s finality laws. The EDD is prohibited by law from resolving these items by California Unemployment Insurance Code section 1376, which provides that EDD cannot establish overpayments more than one year after the close of the benefit year in which the overpayment was made unless the overpayment is found to be a result of fraud, misrepresentation, or willful nondisclosure. Given that there is no fraud or fault on the part of the individuals identified in these populations, EDD is unable to take the required actions to resolve the workload due to California’s finality law provisions. EDD is expecting a response from DOL agreeing with the application of California’s finality laws to the PUA income verification and the SEES workloads. Estimated Implementation Date: Upon DOL response, to be determined Contact: Diane Underwood, Division Chief Unemployment Insurance Branch California Employment Development Department

View Audit 310237 Questioned Costs: $1

Finding 403109 (2022-004)

Material Weakness 2022

State of California

CA

Questioned Costs Eligibility Internal Control / Segregation of Duties § 200.303

As reported in the prior year’s response, since fiscal year 2020-21, the Employment Development Department (EDD) has implemented dozens of strict anti-fraud measures and has continued to evaluate and enhance its fraud detection. EDD has also developed internal fraud working groups and a multiagency ...

As reported in the prior year’s response, since fiscal year 2020-21, the Employment Development Department (EDD) has implemented dozens of strict anti-fraud measures and has continued to evaluate and enhance its fraud detection. EDD has also developed internal fraud working groups and a multiagency fraud task force that reviews fraud data and fraud reports on a continual basis and recommends adjustments to filters and tools as necessary. EDD has successfully halted two large fraud scheme attempts over the previous two years and continues to work towards immediate detection and prevention of fraud attempts. EDD will continue to analyze and assess our processes to stay ahead of the ever-evolving fraud landscape. As previously described, EDD implemented the following measures to address the nationwide fraud attempts perpetrated against the new emergency federal benefit programs in 2020-21: • Implemented additional cross-matches in September 2020 to detect multiple claims per address. • Ceased automatically backdating PUA claims under federal rules in September 2020. • Strengthened identity verification procedures in October 2020 by implementing ID.me. • Implemented additional cross-matches in November 2020 against state inmate information. • Vetted applications against law enforcement databases and other tools provided by Thomson Reuters in December 2020 to further curb identity and non-identity fraud. • Established a 1099-G call center to help victims of identity theft deal with any tax-related questions. • Ceased printing Social Security numbers on mailed documents to reduce identity theft risk. • Enhanced benefit card security with Bank of America. • Partnered with state, local and federal law enforcement agencies to support thousands of criminal investigations, arrests, prosecutions and convictions. The EDD has and will continue to evaluate and enhance the fraud detection/prevention tools that have been put in place. Estimated Implementation Date: Annual reassessment to be completed September 2024 Contact: Diane Underwood, Division Chief Unemployment Insurance Branch California Employment Development Department

View Audit 310237 Questioned Costs: $1

Finding 403107 (2022-003)

Material Weakness 2022

State of California

CA

Eligibility Allowable Costs / Cost Principles HUD Housing Programs § 200.303

The California Department of Public Health (Public Health) Women, Infants, and Children (WIC) Division had agreed that the WIC Web Information System Exchange (WISE) system does not currently store eligibility history that should be included in the “Cert History Report,” and the initial eligibility ...

The California Department of Public Health (Public Health) Women, Infants, and Children (WIC) Division had agreed that the WIC Web Information System Exchange (WISE) system does not currently store eligibility history that should be included in the “Cert History Report,” and the initial eligibility data is overwritten when subsequent eligibility information is keyed into WIC WISE. However, WIC WISE does include preventative internal stops or checkpoints that do not allow ineligible individuals to be certified and issued benefits (e.g., over income, not a California resident, no nutrition risk factor, etc.). User acceptance testing vetted these items prior to system implementation in 2019/20. The certification history condition discussed was remediated via a system Defect Correction to WIC WISE that was in user acceptance testing for implementation in Fall 2023. Public Health/WIC has entered Defect Correction #6972 in TFS (Team Foundation Services), the tracking system previously used to capture system changes and defects. The defect correction supports a system change to ensure initial eligibility information is retained when subsequent eligibility information is entered into WIC WISE. Estimated Implementation Date: August 2023 Contact: William Welch, Assistant Division Chief, Operations Women, Infants, and Children Division California Department of Public Health

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