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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
Finding Number 2024-027 Subject Heading (Financial) or AL no. and program name (Federal) 93.568 - LIHEAP Planned Corrective Action Due to the age and sophistication of updating our current systems, many of our LIHEAP processes and reporting have become outdated. AFS, Finance, and DTO have several pr...
Finding Number 2024-027 Subject Heading (Financial) or AL no. and program name (Federal) 93.568 - LIHEAP Planned Corrective Action Due to the age and sophistication of updating our current systems, many of our LIHEAP processes and reporting have become outdated. AFS, Finance, and DTO have several projects in the pipeline to improve system and program reporting and to improve the reconciliation of eligibility and payment data. Anticipated Completion Date 10/31/2026 Responsible Contact Person Kayla Urtz
Finding Number 2024-012 Subject Heading (Financial) or AL no. and program name (Federal) 93.568 – LIHEAP Planned Corrective Action OKDHS's vendor currently utilizes a live database to source the data needed for the Quarterly Report. OKDHS will require those pulling the data to provide a snapshot of ...
Finding Number 2024-012 Subject Heading (Financial) or AL no. and program name (Federal) 93.568 – LIHEAP Planned Corrective Action OKDHS's vendor currently utilizes a live database to source the data needed for the Quarterly Report. OKDHS will require those pulling the data to provide a snapshot of the database that supports the data used and store these snapshots for our records to better support point in time federal reports. OKDHS program staff will continue to review data submissions and monitor for inconsistencies. OKDHS will add instructions to the Standard Operating Procedures that detail the Program Field Representative and Program Manager reviews. Anticipated Completion Date 10/31/2026 Responsible Contact Person Kayla Urtz
Finding Number 2024-062 Subject Heading (Financial) or AL no. and program name (Federal) 93.558 – TANF Planned Corrective Action OKDHS concurs that documentation supporting the preparation, reconciliation, and review of the ACF-196R should be strengthened. OKDHS has previously directed the CARE team...
Finding Number 2024-062 Subject Heading (Financial) or AL no. and program name (Federal) 93.558 – TANF Planned Corrective Action OKDHS concurs that documentation supporting the preparation, reconciliation, and review of the ACF-196R should be strengthened. OKDHS has previously directed the CARE team to improve documentation of adjustments and corrections made during the financial reporting process, including maintaining sufficient support to clearly identify the nature and basis of changes made to reported amounts. OKDHS is currently working through its financial reporting and reconciliation processes to strengthen the connection between federal financial reports, supporting worksheets, and underlying accounting records. This effort is intended to improve the consistency and transparency of adjustments and corrections and provide a clearer audit trail supporting both report preparation and independent review. OKDHS will continue to formalize and standardize its federal financial reporting and reconciliation procedures. The updated process will include requirements for documenting adjustments and corrections, reconciling reported amounts to underlying financial records, retaining supporting documentation, and documenting independent review of the completed report and related reconciliations. Anticipated Completion Date 9/30/2026 Responsible Contact Person Kayla Urtz
Finding Number 2024-028 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.425U) Planned Corrective Action Since January 2025, the Office of Title Services...
Finding Number 2024-028 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.425U) Planned Corrective Action Since January 2025, the Office of Title Services (OTS) has maintained time and effort records per internal guidelines. OSDE is drafting policies to ensure all employees meet the requirements of 2 CFR §200.430. After implementation, OTS will train staff on these procedures. Anticipated Completion Date Jan-2025 Responsible Contact Person Tammy Smith
Finding Number 2024-026 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.425U) Planned Corrective Action The Office of Title Services (OTS) staff will ensure that at a minimum a district’s inventory procedures meet the ...
Finding Number 2024-026 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.425U) Planned Corrective Action The Office of Title Services (OTS) staff will ensure that at a minimum a district’s inventory procedures meet the following requirements. • For materials and supply items, the Office of Title Services (OTS) staff will review the district’s inventory procedures for compliance with 2 C.F.R. 200.302(b)(4). • For equipment items ($10,000 or greater unit cost) OTS staff will review the district’s inventory procedures for compliance with the requirements of 2 C.F. R. 200.313 (d)(1) • Additionally, training will be provided to staff during our annual internal training. Anticipated Completion Date Aug-25 Responsible Contact Person Tammy Smith
Finding Number 2024-023 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.425U) Planned Corrective Action OSDE will follow the OTS internal policies and procedures for the retention of records. In addition, OTS will cont...
Finding Number 2024-023 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.425U) Planned Corrective Action OSDE will follow the OTS internal policies and procedures for the retention of records. In addition, OTS will continue to develop and implement policies and procedures, along with providing adequate training, to ensure that allocations and expenditures reported on annual reports are accurate and properly supported. Anticipated Completion Date Aug-26 Responsible Contact Person Tammy Smith
Finding Number 2024-019 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425U) Planned Corrective Action OSDE maintains that these procedures are adequate to ensure compliance with 34 CFR §§ 75.600–75.618. Leadership in the Offi...
Finding Number 2024-019 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425U) Planned Corrective Action OSDE maintains that these procedures are adequate to ensure compliance with 34 CFR §§ 75.600–75.618. Leadership in the Office of Title Services determined that OTS did not have the staff capacity to require review of payroll certifications during the application review process; therefore, this monitoring was conducted during onsite visits. Given the limited number of project managers available to perform onsite reviews during the ESSER period, OSDE believes the sampling completed onsite was reasonable and sufficient to assess compliance. Guidance and tools were provided to LEAs to support proper implementation of prevailing wage requirements. Monitoring results are reviewed and approved by OTS leadership, and corrective actions are required when non-compliance is identified. Anticipated Completion Date Sept-25 Responsible Contact Person Tammy Smith
Finding Number 2024-016 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; #84.425U) Planned Corrective Action The agency acknowledges that certain ESSER II and ARP ESSER III claims were approved without adequate review of s...
Finding Number 2024-016 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; #84.425U) Planned Corrective Action The agency acknowledges that certain ESSER II and ARP ESSER III claims were approved without adequate review of supporting documentation by authorized claims reviewers. To address this finding, the agency has strengthened its claims review procedures and internal controls related to reimbursement processing. Additional training will be provided for all claims reviewers regarding: • allowable use of funds requirements, • supporting documentation standards, • verification of invoice documentation, • program coding requirements, and • review and approval expectations for federal claims. The agency will also implement enhanced supervisory review and monitoring procedures to help ensure claims are consistently reviewed in accordance with federal requirements prior to approval. The agency acknowledges that allocation notices were not consistently generated and provided to certain LEAs in accordance with the requirements of 2 CFR § 200.332(a)(1). Additionally, one allocation notice did not contain all required elements, including the Federal Award Identification Number (FAIN) and Federal award date. Although the audit confirmed that allocation amounts and approved budgets within the grants management system were accurate, the agency recognizes the need to strengthen procedures related to issuance and documentation of subrecipient award notifications. To address this finding, the agency will revise and strengthen internal procedures to ensure all required allocation notices are generated, maintained, and distributed timely and consistently to subrecipients. The agency will also coordinate with our third party vendor to implement additional quality control measures and staff training to ensure all required federal award information, including the FAIN and Federal award date, is included in future allocation notices in accordance with 2 CFR § 200.332 requirements. Anticipated Completion Date Sept-26 Responsible Contact Person Tammy Smith
Finding Number 2024-015 Subject Heading (Financial) or AL no. and program name (Federal) AL #10.558 CHILD AND ADULT CARE FOOD PROGRAM (CACFP) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.4 25U) Planned Corrective Action The...
Finding Number 2024-015 Subject Heading (Financial) or AL no. and program name (Federal) AL #10.558 CHILD AND ADULT CARE FOOD PROGRAM (CACFP) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.4 25U) Planned Corrective Action The LEA did not upload sufficient supporting documentation to substantiate the amount claimed. Additionally, the reviewer did not conduct an adequate review of the supporting documentation submitted with the claim. To address this finding, the agency will provide additional training to reviewers on claim review procedures, required supporting documentation, and documentation verification standards. The agency will also strengthen internal review procedures to help ensure claims are properly supported and consistently reviewed prior to approval. Anticipated Completion Date Jul-26 Responsible Contact Person Tammy Smith
Finding Number 2024-002 Subject Heading (Financial) or AL no. and program name (Federal) AL #10.558 CHILD AND ADULT CARE FOOD PROGRAM (CACFP) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.42 5U) Planned Corrective A...
Finding Number 2024-002 Subject Heading (Financial) or AL no. and program name (Federal) AL #10.558 CHILD AND ADULT CARE FOOD PROGRAM (CACFP) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.42 5U) Planned Corrective Action OSDE recognizes the deficiencies identified in the audit and will review current procedures and establish written processes and procedures to ensure proper internal controls to ensure accuracy in OSDE’s SEFA – GAAP package Z. • Review personnel or contractor’s knowledge and training to ascertain their capacity to properly complete and submit OSDE’s SEFA – GAAP Package Z. • Review and formalize written procedures related to OSDE’s SEFA – GAAP Package Z, including an attestation stating that the personnel or contractor reviewed the OMES SEFA - GAAP Package Z Instructions. Anticipated Completion Date Oct - 26 Responsible Contact Person Kathy Wall
Finding Number 2024-001 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.425U) Planned Corrective Action OSDE agrees with the recommendation and will str...
Finding Number 2024-001 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES AL #84.425 – EDUCATION STABILIZATION FUND (ESF - AL #84.425D; 84.425U) Planned Corrective Action OSDE agrees with the recommendation and will strengthen its subrecipient risk assessment and monitoring processes to ensure LEAs are consistently and accurately evaluated. Specifically, OSDE will: • Revise and formalize written policies and procedures governing the Risk Assessment Ranking Tool, including detailed guidance for assigning and documenting risk scores. • Implement a standardized review process requiring supervisory review and approval of all annual risk assessments prior to finalizing LEA risk classifications. • Develop a risk assessment checklist to ensure all required risk factors are evaluated consistently and supporting documentation is maintained. • Provide annual training to staff responsible for completing and reviewing risk assessments to ensure consistent application of scoring criteria. • Perform periodic quality assurance reviews of completed risk assessments to verify scoring accuracy, identify trends or errors, and implement corrective measures when needed. Anticipated Completion Date Aug -26 Responsible Contact Person Tammy Smith
Finding Number 2024-013 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES Planned Corrective Action OSDE acknowledges the audit finding. During the FY24 audit period, monitoring procedures for LEA Supplement Not Supplan...
Finding Number 2024-013 Subject Heading (Financial) or AL no. and program name (Federal) AL #84.010 TITLE I, PART A – GRANTS TO LOCAL EDUCATIONAL AGENCIES Planned Corrective Action OSDE acknowledges the audit finding. During the FY24 audit period, monitoring procedures for LEA Supplement Not Supplant (SNS) methodologies were identified as lacking adequate documentation and verification measures. On July 25, 2024, OSDE submitted corrective action plans to USDE, which included revisions to the ESEA Resource Toolkit, Title I Handbook, and GMS review protocols. As of April 11, 2025, USDE determined that the SNS requirements have been satisfied and confirmed that OSDE’s revised resources are consistent with federal guidance. OSDE has subsequently strengthened internal controls and improved monitoring procedures to ensure ongoing compliance of LEA SNS methodologies and supporting documentation. Anticipated Completion Date Apr-25 Responsible Contact Person Tammy Smith
Finding Number 2024-073 Subject Heading (Financial) or AL no. and program name (Federal) #64.015 Veterans State Nursing Home Care Planned Corrective Action The Oklahoma Department of Veterans Affairs (ODVA) acknowledges the audit findings regarding non-compliance with state and federal procurement p...
Finding Number 2024-073 Subject Heading (Financial) or AL no. and program name (Federal) #64.015 Veterans State Nursing Home Care Planned Corrective Action The Oklahoma Department of Veterans Affairs (ODVA) acknowledges the audit findings regarding non-compliance with state and federal procurement protocols and the overreliance on retroactive Ratification Agreements. While the audit verified that 100% of the sampled funds were utilized for allowable, critical nursing home care activities under Assistance Listing #64.015, we recognize that bypassing the encumbrance process creates compliance risks and reduces real-time budgetary visibility. The agency is fully committed to correcting these procedural deficiencies and strengthening its internal financial controls. Corrective Action Plan (CAP):  Systemic Procurement Overhaul: ODVA will strictly enforce the Oklahoma Statewide Accounting Manual mandate requiring a pre-encumbrance (Department Purchase Requisition) or encumbrance (Purchase Order) to be fully approved in the state accounting system prior to ordering goods or authorizing vendor services.  Vendor Management Remediation: Management discontinued the use of all temporary staffing agencies in FY26, except for an occasional contract nurse in the case of critical short-staffing situations. As of July 15th, 2026, ODVA has less than 10 contracted nursing staff, down from a high of +/-225 in FY25.  Targeted Training Initiative: On September 11 and September 19, 2025, the CFO conducted mandatory training for all procurement, accounts payable, and facility administrative staff – a total of around 36 attendees. Training focused on state encumbrance laws, the strict definitions of "unauthorized commitments," and proper routing workflows.  Strict Ratification Governance: The use of Ratification Agreements will be restricted to true emergency exceptions as permitted by policy.  Internal Pre-Audit Reviews: Since September of FY26, ODVA finance division has incorporated a routine, daily quality assurance check to flag any vendor payments attempted without an active PO, ensuring immediate corrective action before vouchers are finalized. These payments are tracked via a SharePoint file accessible by all relevant staffers. Anticipated Completion Date Completed in September 2025; compliance monitoring is ongoing. Responsible Contact Person Chris Busby, Chief Financial Officer; Eric Edstedt, Purchasing Director
Finding Number 2024-055 Subject Heading (Financial) or AL no. and program name (Federal) #64.015 Veterans State Nursing Home Care Planned Corrective Action ODVA concurs with the finding. During State Fiscal Year 2024, the absence of centralized, standardized tracking procedures resulted in 52 unsubm...
Finding Number 2024-055 Subject Heading (Financial) or AL no. and program name (Federal) #64.015 Veterans State Nursing Home Care Planned Corrective Action ODVA concurs with the finding. During State Fiscal Year 2024, the absence of centralized, standardized tracking procedures resulted in 52 unsubmitted VA Form 10-5588As and a delay in receiving the eligible prevailing per diem rates. Corrective Action Plan (CAP): To strengthen internal controls and ensure compliance with 38 CFR Part 51, ODVA accounting leadership met on July 16, 2026, to overhaul the 10-5588A submission, tracking, and reimbursement process. The following actions have been taken and scheduled to resolve this finding:  Centralized Responsibility: Duties surrounding all 10-5588A recording, tracking, and USDVA liaising have been officially assigned to dedicated Central Office staff to eliminate decentralized, inconsistent procedures across the 7 State Veterans Homes.  Standardized Procedures & Tools: Leadership developed a detailed, step-by-step process outlining exactly how 10-5588As are filed, related VA payments are recorded, and retroactive payment/refunds are tracked. This is paired with a newly revised, comprehensive, and easy-to-read tracking worksheet.  Validation of Procedures: Leadership reviewed unfiled 10-5588As to ensure the updated procedures and tracking tools successfully cover most potential scenarios. Anticipated Completion Date August 31, 2026: Finalize revised tracking sheet and standard operating procedures; October 31, 2026: Complete comprehensive training. Responsible Contact Person Chris Busby, Chief Financial Officer; Caitlyn Thiele, Accounting Manager
Finding Number 2024-075 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management and Enterprise Services – Grants Management Office Response: OMES-GMO r...
Finding Number 2024-075 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management and Enterprise Services – Grants Management Office Response: OMES-GMO respectfully disagrees with several conclusions contained in this finding. The finding concludes that the transfer of CSLFRF funds to the twenty-two (22) state agencies does not create a subrecipient relationship because OMES and the agencies are part of the same State of Oklahoma Single Audit. OMESGMO respectfully disagrees with this conclusion. Pursuant to 62 O.S. § 255.1, “The Legislature authorizes the Office of Management and Enterprise Services to manage federal APRA funds by requiring all receiving entities known as subrecipients to sign a grant agreement. Any entity, without exception, including state agencies receiving an appropriation from the Statewide Recovery Fund or a similar fund with federal requirement attached to its use shall have a fully executed grant agreement in place within sixty (60) days after enactment of any legislation that appropriates funding from the Statewide Recovery Fund of the State Treasury created in Section 1, Chapter 319, O.S.L. 2022, and be in compliance with such agreement before a disbursement can be made.” Under this statutory framework, each agency enters into a Grant Agreement with OMES and is subject to grant-specific terms and conditions, reporting requirements, monitoring, and ongoing oversight. Accordingly, OMES has administered the CSLFRF grant in accordance with state law and consistent with its responsibilities as the State's designated pass-through entity since the inception of the program. The authorization from the Oklahoma State Legislature has provided for a much more extensive oversight of the state entity subrecipients than would exist if OMES followed the model suggested by SAI, as OMES would not be subject to the subrecipient monitoring Federal regulation under 2 CFR § 200.332, for these state entities. By following the state law passed by the Legislature, OMES monitors each state entity subrecipient, and in turn, has signed a grant agreement with these state entity subrecipients that requires them to do the same for any of their subrecipients that are administering projects set out specifically by the State Legislature through appropriation bills. OMES requests SAI to revisit the position that these state entities are not OMES’ subrecipients and consider the implications that if OMES were to treat the state entities as non-subrecipients, OMES would be in direct defiance of state law. OMES-GMO also disagrees with the conclusion that sufficient supporting documentation was unavailable for several of the transactions identified in this finding. OMESGMO is committed to strong documentation standards, reimbursement review procedures, and project oversight to ensure continued compliance with applicable federal and state requirements. Despite OMES-GMO’s request to be included in audit communication with the state entities, SAI’s documentation requests for the sampled expenditures were directed primarily to the individual agencies. Several agencies experienced staffing changes during the audit period, resulting in inconsistencies in responding to documentation requests and, in some instances, uncertainty regarding the specific information being requested by the auditors. In multiple cases, the supporting documentation ultimately existed and was available but was either maintained by OMES-GMO or inadvertently omitted from the agency's initial submission. If OMES-GMO was afforded the opportunity to submit or explain documentation maintained by its office before the finding was finalized, both the administering agency and OMES-GMO would have been able to provide a more complete record for evaluation and may have altered the conclusions reached for certain transactions. OMES-GMO has had recent conversations with SAI regarding this issue, and are encouraged by the willingness of SAI to be open to working with OMES-GMO to facilitate a different process for future audits that involves a coordinated with both the administering agency and OMES-GMO so that auditors have access to the complete record before audit conclusions are finalized. Agency Responses: Agency 025 – Oklahoma Military Department (OMD) OMD partially concurs with the finding regarding the level of supporting documentation submitted with the vendor's invoices for payment. However, the construction contracts in question were executed using Guaranteed Maximum Price (GMP) contract structures. Under these contracts, the contractor is responsible for maintaining all subcontractor invoices, material invoices, and supporting financial records associated with each progress payment. The contracts require these records to be retained for the applicable record retention period and made available for review by the agency, State, or federal government upon request. Agency 085 – Oklahoma Broadband Office (OBO) Broadband Mapping / Cross-Grant Expenditures The Oklahoma Broadband Office (OBO) requests the transactional detail associated with these findings to allow the agency to fully evaluate the questioned transactions. While OBO agrees that expenditures must be charged to the appropriate federal funding source and class fund, the office respectfully disagrees that the questioned expenditures represented unallowable supplementation of other federal awards. The contracts included shared deliverables necessary to complete the CSLFRF Broadband Mapping project. During contract administration, OBO identified billing discrepancies involving work performed under multiple grant programs. Following approximately eleven months of negotiations, OBO entered into a settlement agreement with the contractor that limited payment to services actually received and excluded services that were not performed. The resulting payments represented services provided under multiple funding sources and were processed together to accurately reflect work completed during FY2024. Procurement Finding – Lee Consulting Contract OBO concurs with the finding that services began prior to the execution of a purchase order for the April 2023 services. Upon identifying the issue, OBO completed the required ABS Form 009 Ratification Agreement to formally document the procurement exception and properly authorize payment. To prevent future occurrences, OBO has: • Hired a full-time General Counsel to oversee contract administration and procurement compliance. • Implemented a policy prohibiting execution of contracts or commencement of work until a purchase order has been fully approved and funds have been encumbered. • Provided procurement training to management and staff regarding Oklahoma encumbrance requirements. Agency 400 – Office of Juvenile Affairs (OJA) OJA partially concurs with the finding. The agency believes the purchase of a Keurig coffee maker and heater towers by Western Plains falls within the approved project scope for the purchase and installation of furniture, fixtures, and equipment. However, OJA acknowledges that decorative wall art purchased by Youth and Family Services of Hughes and Seminole Counties does not appear to fall within the approved project scope. Agency 452 – Oklahoma Department of Mental Health and Substance Abuse Services (ODMHSAS) ODMHSAS acknowledges the documentation and procurement concerns identified in the finding. Specifically, the agency recognizes that certain invoices lacked sufficient detail describing services performed and that one expenditure required ratification because services were obligated prior to encumbering funds. ODMHSAS agrees that federally funded expenditures should be supported by documentation demonstrating the services performed, the project purpose, and the relationship to the approved scope of work. ODMHSAS also agrees that obligations should not be incurred before a valid purchase order and encumbrance have been established. Agency 619 – Oklahoma Health Care Workers Training Commission (HWTC) During the period associated with the questioned expenditure, the Care Providers program submitted a significant volume of supporting documentation with each reimbursement request, often consisting of 500 to 1,000 pages transmitted through multiple emails over several days. In some instances, the documentation was not organized sequentially, making it difficult to efficiently compile and review the complete reimbursement package. As staff assembled documentation received through multiple transmissions, a portion of the supporting documentation was inadvertently omitted from the reimbursement file maintained by the agency. Consequently, the complete documentation package was not included in the materials submitted to OMES-GMO with the reimbursement request. To address this issue, management revised its documentation review procedures. Rather than requiring agency staff to reorganize incomplete or disorganized submissions, staff are now instructed to return reimbursement packages that are incomplete or not properly organized and require the submitting entity to provide a revised, complete documentation package. This change places responsibility for maintaining complete supporting documentation with the originating entity and has resulted in more organized reimbursement submissions while reducing the risk of incomplete supporting records. Agency 830 – Oklahoma Department of Human Services (DHS) DHS disagrees that the questioned incentive gift cards were outside the approved project scope. The PCCT Fatherhood Today program is designed to strengthen father-parent-child relationships by engaging fathers through education, support services, and community resources. The program targets fathers residing in underserved communities who often face barriers to participation, including transportation, childcare, financial hardship, and food insecurity. The $100 gift cards are provided only after participants successfully complete the twelve-week 24/7 Dad curriculum. The gift cards serve as an incentive to recruit and retain participants and support the program's objective of increasing father engagement. DHS believes the incentives directly support successful program participation and allow participants to obtain essential household items for their families. DHS further noted that participant outcomes are measured through pre- and post-program assessments demonstrating increased knowledge and engagement among participating fathers. Gift cards are purchased using agency purchasing procedures, maintained in secured storage, and distributed only upon successful completion of all program requirements with appropriate documentation maintained for each recipient Anticipated Completion Date OMES: December 31, 2026 025: Completed 085: Completed 400: Completed 452: December 31, 2026 619: December 31, 2026 830: Completed Responsible Contact Person OMES: Elizabeth Base 025: Angela Tackett 085: Beverlee Harbuck 400: Kevin Haddock 452: Chad Carden 619: Kami Fullingim 830: Lindsey Kanaly
Finding Number 2024-074 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management and Enterprise Services – Grants Management Office Response: OMES-GMO r...
Finding Number 2024-074 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management and Enterprise Services – Grants Management Office Response: OMES-GMO respectfully disagrees with the conclusion that adequate supporting documentation was unavailable and that OMES-GMO's procedures do not ensure that key documentation elements are provided prior to reimbursement. The State Auditor and Inspector's Office requested documentation directly from the Department of Human Services (DHS) but did not contact OMES-GMO to determine whether additional supporting documentation or clarification was available before concluding that the documentation was insufficient. Throughout the administration of the CSLFRF program, OMES-GMO requested to be included in audit documentation requests involving agency expenditures to ensure that all available supporting documentation could be provided and that any questions regarding reimbursement requests, contract administration, or project documentation could be addressed before conclusions were reached. Had OMES-GMO been afforded the opportunity to supplement the agency's submission, additional documentation supporting the reimbursement requests and contract administration could have been provided for consideration. OMES-GMO recognizes that the contractor invoices could have contained greater detail. While OMES-GMO believes sufficient supporting documentation existed to demonstrate the allowability and allocability of the costs, it agrees that enhanced invoice detail would improve transparency, strengthen the audit trail, and facilitate the audit process. Prior to this audit, OMES-GMO had already strengthened its reimbursement review procedures to help ensure that key documentation elements are obtained before reimbursement. Beginning in SFY 2025, all CSLFRF payment requests from state entities have been processed through the newly implemented OMES Grants Management System (OGX), which provides an additional layer of internal control. The system requires a two-tier review and approval process by the requesting state entity before reimbursement requests are submitted to OMES-GMO. Once received, each request undergoes a three-tier review by separate OMES-GMO team members using the approved CSLFRF award, supporting documentation submitted by the state entity, and applicable program eligibility requirements before payment is authorized. This process provides multiple levels of review designed to help ensure that reimbursement requests are adequately supported and consistent with applicable ARPASLFRF requirements. OMES-GMO respectfully requests that future audit documentation requests involving CSLFRF reimbursements be coordinated with both the administering agency and OMES-GMO. This collaborative approach would help ensure auditors have access to the complete documentation maintained by all parties and allow for a more comprehensive evaluation of compliance before deficiencies are concluded. 830 – Oklahoma Department of Human Services The Oklahoma Department of Human Services (OKDHS) does not concur that the full $67,998 identified in the finding should be classified as questioned costs. OKDHS acknowledges that the original JGC invoices did not contain the level of project- and staff-specific detail recommended in the finding. However, the absence of all supporting detail on the face of an invoice does not, by itself, establish that the underlying costs were unallowable or unsupported. The applicable Federal cost principles require costs to be adequately documented, but do not require all supporting documentation to be contained within the vendor invoice itself. Following the identification of SAI's specific concerns, OKDHS provided additional underlying documentation, including detailed timekeeping records identifying staff, hours worked, projects associated with the work, and descriptions of the activities performed. SAI subsequently indicated that the total hours reflected on the invoices materially agreed to the total hours reflected in the underlying timekeeping records. Accordingly, the additional documentation substantiates that the underlying labor hours were incurred and provides support regarding the nature of the services performed. For the $13,320 associated with SB 1186, the finding acknowledges that SB 1186 funded only one project. Therefore, there is no allocation of the invoiced costs among multiple SB 1186 projects at issue. To the extent the subsequently provided timekeeping and supporting records substantiate that the services were performed in support of the authorized project, OKDHS does not believe the full amount should remain classified as questioned costs solely because the original invoice summarized the services performed. For the $54,678 associated with HB 2884, OKDHS acknowledges that the distribution of costs among individual projects reflected on the invoice does not directly correspond to the project designations reflected in the detailed timekeeping records. However, the detailed records substantiate the total hours worked and the nature of the administrative and program management services performed. HB 2884 expressly authorized OKDHS to retain up to two percent of the funds appropriated by the act to reimburse costs incurred by OKDHS, or costs incurred on the agency's behalf, associated with administration of the appropriated funds and programming required under the act. JGC provided program management and administrative services supporting OKDHS's implementation and administration of the ARPA-funded projects. Additionally, 2 CFR § 200.405(d), as cited in the finding, recognizes that when a cost benefits two or more projects or activities and the proportional benefit cannot be readily determined because of the interrelationship of the work involved, the cost may be allocated to benefited projects on a reasonable documented basis. Accordingly, a difference between the project designation reflected in an employee's detailed time record and the allocation of shared administrative costs among benefited projects does not, by itself, establish that the underlying cost was unallowable. OKDHS recognizes that the documentation maintained with the reimbursement requests did not clearly demonstrate the relationship between the detailed timekeeping records and the methodology used to allocate shared administrative costs among the HB 2884 projects. OKDHS will review the allocation methodology and supporting records to confirm that the costs were allocated among benefited projects on a reasonable basis and will correct any actual unsupported or ineligible costs identified through that review. OKDHS has also strengthened its documentation expectations for administrative cost reimbursements. Going forward, supporting documentation will provide a clearer audit trail between the underlying services performed, applicable projects or activities, and the amounts invoiced or allocated. Where administrative services benefit multiple projects and cannot reasonably be assigned based solely on direct project hours, the allocation methodology and basis will be documented and retained with the supporting records. Accordingly, OKDHS agrees that documentation supporting the allocation methodology should be strengthened but does not concur that the documentation deficiency, in itself, supports questioning the full $67,998 where underlying records substantiate the labor incurred and services performed Anticipated Completion Date Completed Responsible Contact Person OMES: Elizabeth Base DHS: Lindsey Kanaly
Finding Number 2024-044 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management and Enterprise Services – Grants Management Office Response: OMES-GMO r...
Finding Number 2024-044 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management and Enterprise Services – Grants Management Office Response: OMES-GMO respectfully disagrees with the conclusion that the variances identified in this finding represent deficiencies in internal controls over Project and Expenditure (P&E) reporting. While OMES-GMO agrees that accurate reporting is essential and remains committed to continually strengthening its reporting processes, the variances identified are primarily attributable to timing differences inherent in the State's accounting, reimbursement, and grant administration processes rather than errors in reporting or deficiencies in internal controls. Quarterly Project and Expenditure Reports submitted to the U.S. Department of the Treasury are prepared using the best information available at the time each report is due. Because agencies operate under established State accounting and reimbursement processes, expenditures are not always fully processed, approved, posted in PeopleSoft, or reimbursed by the close of each Treasury reporting quarter. Consequently, legitimate timing differences may exist between quarterly Treasury reports and subsequent reconciliations to the Statewide Accounting System. Treasury's Project and Expenditure reporting process allows recipients to update previously reported information through subsequent quarterly submissions. As expenditures are processed, accounting adjustments are completed, and additional information becomes available, corrections may be made in future reporting periods. OMES-GMO recognizes the importance of reconciling these timing differences; however, complete alignment between quarterly Treasury reporting and the Statewide Accounting System cannot always be achieved until the close of the CSLFRF period of performance, when all expenditures, reimbursement requests, accounting adjustments, and project closeout activities have been completed. For this reason, OMESGMO does not believe these timing-related variances, standing alone, constitute deficiencies in internal controls. The agencies identified in this finding provided additional information demonstrating that the reported variances were the result of normal business processes, reimbursement timing, accounting adjustments, or Treasury reporting requirements rather than inaccurate reporting or unsupported expenditures. Agency 055 confirmed that the expenditures identified by the auditors were identifiable and supported. Agency 085 explained that the reported variance resulted from a temporary operational period during which expenditures for multiple federal grant programs were processed through Class Fund 497 because other federal funding accounts were unavailable during a novation period. Those expenditures were never intended to be reported as CSLFRF costs and have since been, or are being, transferred to the appropriate federal funding sources through Journal Vouchers and reimbursement processes. Agency 090 explained that the consolidation of expenditures with Agency 423 created timing differences between reporting quarters. Agency 452 stated that the variance resulted primarily from the timing of Treasury reporting deadlines compared to the posting of expenditures in PeopleSoft, resulting in temporary differences that were subsequently reconciled. Agency 605 explained that excess advance funding was returned following contract amendments based on projected spending needs, while actual expenditures continued into subsequent reporting periods, creating temporary timing differences. Agency 619 demonstrated that the questioned expenditures were reported in the quarter in which reimbursement requests were received, processed, and submitted to OMES-GMO. In addition, one cash advance originally included in a quarterly report was removed at OMES-GMO's direction to comply with Treasury reporting guidance. Agency 800 explained that the reported variance resulted from the timing of State accounting transactions, where federal revenue was deposited at the end of the fiscal year while the related expenditures could not be posted until the subsequent fiscal year due to State accounting system limitations. The agency believes this represents a normal timing difference between reporting methodologies rather than a reporting deficiency. Although OMES-GMO disagrees that these timing-related variances constitute deficiencies in internal controls, OMES- GMO remains committed to strengthening reporting procedures. Beginning with FY2025 reporting, OMES-GMO has implemented enhanced reconciliation procedures requiring agencies to reconcile reported expenditures to Summary of Receipts and Disbursements (SRD) reports and PeopleSoft data prior to submission. OMES-GMO has also expanded agency guidance and annual training regarding Treasury reporting requirements, reconciliation procedures, and documentation expectations. These enhancements improve reporting consistency while recognizing that timing differences may continue to occur throughout the period of performance and will be resolved through subsequent Treasury reporting updates and final grant closeout. Anticipated Completion Date April 30, 2027, due to variances in normal business processes, reimbursement timing, accounting adjustments, and Treasury reporting requirements. Responsible Contact Person Elizabeth Base
Finding Number 2024-043 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management Enterprise Services – Grant Management Office Response: The Oklahoma Of...
Finding Number 2024-043 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management Enterprise Services – Grant Management Office Response: The Oklahoma Office of Management and Enterprise Services (OMES) agrees that strong project planning and feasibility evaluations for large-scale capital projects are important processes for each individual agency to implement. OMES also recognizes that certain factors can impact the original evaluation, and if those factors occur, reevaluation of a project’s feasibility is a prudent measure to determine the future direction of a project. The Federal regulation 2 CFR § 200.317, directs that “a State must follow the same policies and procedures it uses for procurements from its non-Federal funds.” Oklahoma has laws in place for state agencies for the purchase of tangible and intangible property, which ensure obligations are properly encumbered by a contract or purchase order. Therefore, OMES agrees that in order to be in compliance with federal and state laws and regulations, each individual agency should have strong internal controls in place to ensure obligations of federal funds are properly encumbered before commitments are made. ODMHSAS Response to Finding No. 2024-043 ODMHSAS partially concurs with Finding No. 2024-043. ODMHSAS agrees that controls should be strengthened for large-scale federally funded capital projects and acknowledges the separate encumbrance issue identified in the finding. ODMHSAS does not concede that the full $6,218,295 questioned amount was wasted, unallowable, or subject to repayment based solely on the later cancellation of the original Donahue new-build project. ODMHSAS acknowledges that the original Donahue Behavioral Health Campus new-build project did not proceed to construction and that the Department later pursued a different facility solution through acquisition and renovation of an existing facility. The Donahue project, however, was an active, legislatively funded capital project intended to replace Griffin Memorial Hospital at the time the expenditures were incurred. Based on the available expenditure detail, the questioned-cost population includes architectural services, site or lease-related payments, consulting services, surveying or mapping services, and other planning and development costs associated with the project. ODMHSAS recognizes that the original project did not result in a completed capital asset. ODMHSAS also recognizes that federal allowability requires more than the existence of an approved project. Costs must be necessary, reasonable, allocable, and adequately documented. For that reason, ODMHSAS will conduct a reasonable transaction-level review using available records to determine what documentation exists for the expenditures identified in this finding, what work was performed, whether any deliverable or work product was received, whether the expenditure provided planning, feasibility, decision-making, or other project value, and whether further coordination with OMESGMO is needed regarding accounting treatment or other resolution. ODMHSAS further notes that the decision to discontinue the original Donahue new-build project should not, by itself, determine whether every planning or development cost incurred before cancellation was wasted or unallowable. ODMHSAS did not pay for a completed building at that stage of the project; it paid for planning, design, cost-estimating, site-evaluation, and feasibility-related services for an authorized replacement hospital project. The SLFRF capitalexpenditure framework recognizes that recipients may evaluate the need addressed, the appropriateness of a capital expenditure, and alternative capital approaches before determining the best path forward. Available information indicates the original concept contemplated moving both Griffin Memorial Hospital and CRC functions to the Donahue site, and the project scope, bed count, and estimated cost were later reevaluated as construction costs increased significantly, including post-COVID construction-cost escalation. Those services produced project information, design materials, cost information, and feasibility analysis that provided decision-making value, including information that helped ODMHSAS determine that the original newbuild approach was not financially feasible and that an alternative facility solution was necessary before substantially greater construction costs were incurred. ODMHSAS will therefore review the expenditures by category and transaction rather than treating the later cancellation of the project as dispositive of the allowability or value of each prior cost. ODMHSAS also notes the timing of the legislative and project changes. On October 5, 2022, the Legislature appropriated $87 million through HB 1013 for construction of a replacement facility for Griffin Memorial Hospital. During SFY 2024, ODMHSAS incurred planning, design, and initial development expenditures for the Donahue Behavioral Health Campus. The original new-build approach later became financially infeasible due to escalating construction costs and budget shortfalls, and by May 2025 ODMHSAS had moved away from the original construction plan and pursued acquisition and renovation of the former SSM Health facility as the successor facility solution. SB 1178 then reappropriated and redesignated $66.5 million of the original $87 million appropriation from construction of a replacement facility for Griffin Memorial Hospital to purchase and renovation of a replacement facility for Griffin Memorial Hospital, within the same thirty (30) mile geographic limitation. SB 1178 also recognized that the original appropriation could be reduced by prior expenditures, encumbrances, and transfers. ODMHSAS does not contend that SB 1178 alone resolves the allowability of prior costs, but it is relevant context showing that the remaining project funding was redirected by legislative action for the same public-health purpose of replacing Griffin Memorial Hospital. ODMHSAS further notes that the successor SSM acquisition and renovation project continued the same underlying public health purpose as the original Donahue project: replacing Griffin Memorial Hospital and expanding behavioral health treatment capacity. Available SSM transaction documents reflect that ODMHSAS pursued the purchase of the property at 2129 S.W. 59th Street for use in addressing the ongoing demand for mental health services, and related lease documentation reflects that ARPA-SLFRF funds used for the lease were designated for behavioral health services expansion. After the original Donahue new-build approach was no longer financially viable, ODMHSAS pursued the SSM acquisition and renovation approach as a feasible alternative to continue the Griffin replacement purpose. ODMHSAS will also review whether any amounts included in the federal questioned-cost population were recovered, refunded, offset, corrected, or otherwise resolved after the original expenditure. Separately, ODMHSAS has identified Donahue-related refund activity associated with private donations and grants, including an Oklahoma State University refund of $4,822,671.93, donor refunds totaling $1,820,000, and a remaining balance of $3,002,671.93 as of March 26, 2026. Based on current information, ODMHSAS understands this activity to relate to private donations and grants, not CSLFRF/ARPA funds. ODMHSAS will review the underlying accounting records to confirm the funding source, deposit, refund, and remaining balance treatment, and to ensure that this private donation and grant activity is treated separately from the federal questioned-cost population. ODMHSAS has also identified local contribution activity within the questioned-cost population that requires further review. Based on initial internal review, approximately $2.5 million of the questioned-cost population appears to relate to Oklahoma County and City of Oklahoma City contributions associated with the Donahue project, including $1.5 million from Oklahoma County and $1 million from the City of Oklahoma City. ODMHSAS understands that the Oklahoma County amount was repaid in December 2025 and that the City of Oklahoma City amount remains associated with the successor OKCBHC/SSM project or related project accounting. ODMHSAS will review the underlying accounting records, funding-source documentation, refund records, and project accounting treatment to determine whether these local contribution amounts should remain in the federal questioned-cost population, should be treated separately, or should otherwise affect the questioned-cost amount. ODMHSAS acknowledges the separate encumbrance issue related to claim 629685. Based on available records, the claim involved an obligation for services that was incurred before the applicable purchase order and encumbrance process was completed, requiring a subsequent ratification. The Department recognizes that obligations should not be incurred before a valid purchase order and encumbrance are in place. As reflected in the finding, the $50,000 claim was corrected by payment with state funds and was not questioned. ODMHSAS will address that issue through strengthened pre-obligation controls, procurement review, and targeted guidance or training for staff responsible for initiating purchases or contracts. Nothing in this response should be construed as an admission that the full questioned-cost amount is unallowable or subject to repayment. ODMHSAS will coordinate with OMESGMO as needed after review of the available records, including any refund, recovery, offset, correction, or other accounting issue relevant to the questioned-cost population. Corrective Action Planned ODMHSAS will take reasonable steps to strengthen controls over planning, documentation, procurement, and encumbrance review for significant federally funded capital projects. ODMHSAS will develop or update internal review procedures for significant federally funded capital-project expenditures. The procedures will address project scope, available funding, estimated project cost, material changes in feasibility, and approval authority before substantial planning, design, development, or construction-related costs are incurred. The review process will be scaled to the size, complexity, and funding source of the project. ODMHSAS will also strengthen documentation expectations for federally funded capital project invoices. For future expenditures, invoices or supporting materials should identify the services performed, billing period, project phase, and connection to the approved project scope. Where invoices contain only general descriptions, such as “progress billing” or “work completed,” ODMHSAS will seek additional support from the vendor, project manager, or available project file before approving the cost for federal reimbursement. ODMHSAS will require program or project-level confirmation that services were received and were related to the approved project before payment or reimbursement is processed. Finance and Procurement will review federally funded capital-project expenditures for appropriate coding, available support, and compliance with applicable funding and encumbrance requirements. ODMHSAS will conduct a risk-based review of the Donahue expenditures identified in Finding No. 2024-043 using available records. The review will focus on identifying the vendor, amount, funding source, available support, and whether any cost was refunded, recovered, offset, corrected, or requires additional accounting review or coordination with OMES-GMO. Because many of the underlying project decisions and records predate current leadership and staff, ODMHSAS will conduct this review based on the documentation reasonably available to the Department. As part of that review, ODMHSAS will review available accounting and reporting records for the Donahue and SSM projects to determine how ARPA-SLFRF funds associated with the replacement-facility work were obligated, reported, redirected, or applied to the successor Griffin replacement facility project, and whether that treatment affects the federal questioned-cost population. ODMHSAS will separately review the Donahue-related private donation and grant refund activity, including the OSU-OKC settlement documentation, to confirm the funding source, deposit, refund, and remaining balance treatment, and to ensure that non-federal donation and grant activity is not included in, or confused with, the federal questioned-cost population. ODMHSAS will also review the Oklahoma County and City of Oklahoma City contribution amounts identified within the questioned-cost population, including documentation of the reported Oklahoma County repayment and the accounting treatment of the City of Oklahoma City contribution, to determine whether those amounts should remain in the federal questioned-cost population, should be treated separately, or otherwise affect the questioned-cost amount. To address the encumbrance concern, ODMHSAS will implement or reinforce a pre-obligation verification process for future procurements. Staff responsible for initiating purchases, contracts, task orders, or service authorizations will be directed to confirm that a valid purchase order and encumbrance are in place before authorizing work. Any transaction requiring ratification will be reviewed to determine the cause and whether additional corrective action is needed. ODMHSAS will provide targeted written guidance and, as needed, training to appropriate staff regarding federal documentation requirements, invoice review, project-scope review, funding-source verification, and state encumbrance requirements. Anticipated Completion Date ODMHSAS anticipates completing updated procedures, review checklists, and targeted written guidance by June 30, 2027. Because the Donahue review requires analysis of historical project expenditures, related accounting and reporting records, multiple funding sources, and coordination with OMESGMO, ODMHSAS anticipates completing the risk-based transaction review and related followup by December 31, 2027. Responsible Contact Person OMES: Elizabeth Base 452: Chad Carden
Finding Number 2024-040 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management Enterprise Services – Grant Management Office Response: OMES-GMO concur...
Finding Number 2024-040 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management Enterprise Services – Grant Management Office Response: OMES-GMO concurs with the audit finding that $88,768 in expenditures from CSLFRF Class Fund 488 were applied to costs associated with the Governor's Emergency Education Relief (GEER) and Emergency Rental Assistance (ERA) programs. While these expenditures were allowable under their respective federal programs, they were inadvertently charged to the incorrect federal funding source. OMES-GMO is currently working with OMES Finance to complete all necessary accounting adjustments to reclassify the expenditures to the appropriate federal funding source. The corrective entries are in process, and once completed, the recovered CSLFRF funds will be utilized solely for eligible and allowable CSLFRF administrative expenditures in accordance with U.S. Department of the Treasury requirements. OMES has increased staffing, standardized financial review procedures, and strengthened grant management processes. To further enhance internal controls, OMES-GMO has implemented a two-tier review process for all PeopleSoft expenditures charged to federal grant funds. Under this process, expenditures are reviewed by multiple levels of staff to verify the appropriate class fund, funding source, and federal award prior to payment and financial reporting. This enhanced review process reduces the risk of expenditures being charged to an incorrect federal program. Additionally, beginning in SFY 2025, all expenditure requests submitted by CSLFRF subrecipients are processed through the OMES Grants Management System (OGX). Because OGX is dedicated exclusively to administering the ARPA State and Local Fiscal Recovery Fund (SLFRF) program, routing all CSLFRF payment requests through the system provides an additional level of internal control. The system requires expenditures to be reviewed against the approved SLFRF award, supporting documentation, and program eligibility requirements before payment is authorized, helping ensure that only eligible ARPA-SLFRF expenditures are processed using the appropriate funding source. Collectively, these corrective actions—including the accounting reclassification currently being completed in coordination with OMES Finance, the enhanced PeopleSoft review procedures, implementation of OGX for CSLFRF payment processing, management oversight, and routine reconciliations—have significantly strengthened OMESGMO's internal controls over federal program expenditures and will help prevent future miscoding of expenditures among federal awards. Anticipated Completion Date September 1, 2026 Responsible Contact Person Elizabeth Base
Finding Number 2024-039 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management Enterprise Services – Grants Management Office Response: The Oklahoma O...
Finding Number 2024-039 Subject Heading (Financial) or AL no. and program name (Federal) ALN: 21.027 Federal Program name: Coronavirus State And Local Fiscal Recovery Funds (CSLFRF) Planned Corrective Action Office of Management Enterprise Services – Grants Management Office Response: The Oklahoma Office of Management and Enterprise Services – Grants Management Office (OMES-GMO), in coordination with the OMES Financial Reporting Unit (FRU), agrees that strengthened controls and enhanced processes are necessary to ensure the accurate preparation and reporting of expenditures on the Schedule of Expenditures of Federal Awards (SEFA). However, because the SFY 2023 Single Audit was not issued until August 2025, the recommendations from that audit could not be fully implemented prior to the completion of the SFY 2024 SEFA reporting process. OMES FRU worked with the agencies identified by the State Auditor's Office to review and, where appropriate, amend their FY2024 GAAP Package Z submissions. Any necessary revisions to the FY2024 SEFA have been made to ensure federal expenditures are reported accurately and in accordance with applicable federal requirements. OMES FRU reviewed agency-specific exceptions identified during the audit to validate reported expenditures and supporting documentation. In FY2025, OMES FRU implemented additional internal controls designed to improve the completeness and accuracy of SEFA reporting. These enhancements include revisions to the GAAP Package Z template that require agencies to reconcile reported federal expenditures and cash balances to the Summary of Receipts and Disbursements (SRD) reports. OMES FRU reviews these reconciliations against PeopleSoft financial data to identify discrepancies before the statewide SEFA is finalized. Additionally, OMES FRU has established annual SEFA reporting training for agency personnel responsible for federal financial reporting. The training addresses SEFA reporting requirements, completion of the GAAP Package Z, reconciliation procedures, and documentation expectations to promote consistent application of federal reporting requirements across all state agencies. Collectively, these enhancements strengthen statewide internal controls over SEFA preparation and reduce the risk of reporting errors in future fiscal years. Agency 055 – Oklahoma Arts Council The agency submitted a corrected FY2024 SEFA to the State Auditor's Office on February 17, 2026. Agency 060 – Oklahoma Department of Aerospace and Aeronautics The Department of Aerospace and Aeronautics submitted a corrected FY2024 SEFA to the State Auditor's Office on February 10, 2026, correcting the CSLFRF reporting identified during the audit. Agency 452 – Oklahoma Department of Mental Health and Substance Abuse Services (ODMHSAS) ODMHSAS concurs with the finding related to its FY2024 SEFA reporting for ALN 21.027. The agency determined the variance resulted, in part, from expenditures that were not assigned the appropriate Assistance Listing Number (ALN) and therefore were omitted from the original SEFA. ODMHSAS corrected the reporting and submitted updated information reflecting the proper CSLFRF expenditures. The agency will continue coordinating with OMES-GMO to ensure that future CSLFRF expenditures are properly identified, reconciled, and reported. Agency 585 – Oklahoma Department of Public Safety The Department of Public Safety concurs with the finding. The agency indicated that personnel turnover during the implementation of the award contributed to the issue and that staff were not aware the project should be administered as a federal grant. As a result, the Assistance Listing Number (ALN) was not established in PeopleSoft, and expenditures were not tracked using normal federal grant procedures. Additionally, CSLFRF reimbursements were received through transfers reflected on the Summary of Receipts and Disbursements rather than traditional federal reimbursement processes, making identification more difficult. DPS has acknowledged the reporting deficiencies and stated that corrections will also be made to its FY2025 SEFA. Agency 670 – J.D. McCarty Center J.D. McCarty Center determined the variance resulted from two expenditures that were not captured on the Summary of Receipts and Disbursements report used during SEFA preparation. The agency concluded the discrepancy could have been identified through a manual reconciliation of expenditures to the SRD report. An updated FY2024 SEFA was subsequently submitted to correct the reporting. Agency 800 – Oklahoma Department of Career and Technology Education CareerTech explained the variance resulted from a data entry error on a revised SEFA requested by the State Auditor's Office. While transferring data from the agency's reconciliation worksheet to the GAAP Package Z form, an extra parenthesis was inadvertently retained, creating a double-negative and overstating the adjustment. After the error was identified by the auditors, CareerTech corrected the report and submitted a revised SEFA. Agency 830 – Oklahoma Department of Human Services DHS concurs with the finding and determined that ARPA expenditures were omitted from the agency's payable calculation used in preparing the SEFA. Going forward, DHS will ensure all ARPA and other federal grant expenditures are included in its payable calculations. The Budget Director will review and approve the payables submitted for SEFA reporting, and CARE staff will notify Budget whenever a grant reflects no reported payables to ensure expenditures have not been omitted. Agency 835 – Oklahoma Water Resources Board The Oklahoma Water Resources Board acknowledges that certain cash transfers were incorrectly reported as federal expenditures on the FY2024 SEFA and that some expenditures were recognized in the incorrect fiscal year due to timing and cutoff issues. The agency noted that the underlying GAAP financial statements accurately reflect the PeopleSoft general ledger and that the issue relates solely to federal SEFA presentation. Management evaluated whether prior-year accounting records could be adjusted to better distinguish transfers from expenditures; however, OMES determined prior fiscal years would not be restated. The agency will work with OMES to ensure future SEFA reporting appropriately distinguishes cash transfers from federal expenditures and recognizes expenditures in the proper reporting period. Anticipated Completion Date Completed Responsible Contact Person OMES: Elizabeth Base 055: April Kowardy 060: Chris Wadsworth 452: Chad Carden 585: Brittany Stroud 670: Erik Paulson & Darrell Green 800: Lisa Batchelder 830: Lindsey Kanaly 835: Jerri Hargis
Finding Number 2024-054 Subject Heading (Financial) or AL no. and program name (Federal) 20.205 - Highway Planning and Construction Planned Corrective Action The Agency went live in PeopleSoft Financials with online voucher entry to pay invoices for operating accounts and the 747 process (Load Vouch...
Finding Number 2024-054 Subject Heading (Financial) or AL no. and program name (Federal) 20.205 - Highway Planning and Construction Planned Corrective Action The Agency went live in PeopleSoft Financials with online voucher entry to pay invoices for operating accounts and the 747 process (Load Vouchers from Remote) for invoices for capital accounts. Both these interfaces have built in edit capabilities to detect and deter duplicate invoices. During the PeopleSoft implementation, division staff were trained on keeping Invoice logs for all their payments. Also, reports have been built to be run by Financial Services Accounts Payable staff monthly to pull all possible duplicate payments for review. Anticipated Completion Date 07/02/2025 Responsible Contact Person Sam Ddamba
Finding Number 2024-050 Subject Heading (Financial) or AL no. and program name (Federal) 20.205 - Highway Planning and Construction Planned Corrective Action The following actions will be taken to improve our payroll processes and ensure compliance with the Code of Federal Regulations (CFR) and the ...
Finding Number 2024-050 Subject Heading (Financial) or AL no. and program name (Federal) 20.205 - Highway Planning and Construction Planned Corrective Action The following actions will be taken to improve our payroll processes and ensure compliance with the Code of Federal Regulations (CFR) and the Oklahoma Department of Transportation (ODOT) Specifications and Construction Control Directive (CCD). We have detailed written procedures for the Residencies in the form of a Construction Control Directive (CCD). It is the expectation that the CCD will be followed, and this expectation will be relayed to those responsible for ensuring that ODOT is in compliance with the Davis- Bacon Act. It is unknown whether or not appropriate actions were taken by the Residency in response to the delayed submission of payroll records. The CCD will be emphasized at a future District Engineer meeting and at an upcoming Resident Engineer Academy. Steps will be taken to ensure each Residency has a date stamp and is instructed to use it appropriately. Steps will be taken to ensure that those responsible for verifying payroll with interview results are conducting the process correctly. Expectations will be made clear that interviews will be conducted with the appropriate contractor and subcontractor personnel. Management will stress to the Residencies that extra effort will be needed to diversify interviews on projects. We are in the process of activating the electronic payroll portion of AASHTOWare Project, which will automate much of our payroll process and reduce the occurrence of discrepancies such as those identified in this finding. The use of this system will become mandatory for our contractors with the October 2026 lettings. As part of this process, we will create a Special Provision and update the CCD. ODOT Audit Office conducted an internal Labor Wage Audit last year and covered the findings at the last Resident Engineer Academy. Anticipated Completion Date 10/31/2026 Responsible Contact Person John B. Leonard
Finding Number 2024-047 Subject Heading (Financial) or AL no. and program name (Federal) 20.205 - Highway Planning and Construction Planned Corrective Action ODOT Contract Compliance Division (CCD) is updating the Guidelines for the Administration of Consultant Contracts, Standard Operating Procedur...
Finding Number 2024-047 Subject Heading (Financial) or AL no. and program name (Federal) 20.205 - Highway Planning and Construction Planned Corrective Action ODOT Contract Compliance Division (CCD) is updating the Guidelines for the Administration of Consultant Contracts, Standard Operating Procedures (SOPs) and training staff on correct procedures for filing documentation. Discussion was held with the ACEC Admin Working Group on 4/7/2026, that FAR Audits were not being submitted timely, and additional guidance would be issued by ODOT. ODOT CCD is partnering with the ODOT Audit Office for FAR Audit Requirements and the development of Self-Certification and Safe Harbor Rate Programs. FAR requirements will be discussed at the annual ACEC Partnering Conference in September 2026. ODOT will provide copies of updated Guidelines and SOPs as they are developed. Anticipated Completion Date 12/31/2026 Responsible Contact Person Jennifer Hankins
Finding Number 2024-087 Subject Heading (Financial) or AL no. and program name (Federal) #17.225 Unemployment Insurance Planned Corrective Action The agency concurs with the findings and agrees with the recommendations. The agency acknowledges our responsibility for program integrity and proper cont...
Finding Number 2024-087 Subject Heading (Financial) or AL no. and program name (Federal) #17.225 Unemployment Insurance Planned Corrective Action The agency concurs with the findings and agrees with the recommendations. The agency acknowledges our responsibility for program integrity and proper controls for the RESEA program. As we referenced in our response last year, the agency has undertaken modernization efforts to provide better solutions for the RESEA program. EmployOklahoma is the first result of this effort in the workforce employment area and it launched in January 2025 as the replacement for OKJM. We anticipate continued progress and improvement going forward, but there will continue to be elevated risk for inaccuracies until the agency’s modernization efforts are successful in implementing solutions to address both the case management and data reporting requirements needed to fully resolve these findings. In Fall 2025 and continuing through 2026, UI Program staff has provided guidance and training on unemployment compensation (UC) eligibility requirements, specifically as it relates to Able & Available issues and Job Search requirements. Additionally, RESEA Program staff continue to provide ongoing training to, and oversight of RESEA case management staff. While we expect continued issues through FY2024, we anticipate improvement in FY2025 as ongoing changes in the case management system and increased staff training on RESEA program requirements drive us closer toward improved reporting and program outcomes. Anticipated Completion Date Ongoing until modernization of RESEA tools is complete Responsible Contact Person Tammy Wood, RESEA/TAA Program Manager
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