State of Missouri
Single Audit
Corrective Action Plan
Year Ended June 30, 2023
State Agency: Department of Health and Senior Services
Audit Finding Number: 2023-013 CACFP Subrecipient Monitoring
Name of the contact person responsible for corrective action: Sarah Walker, Bureau Chief
Anticip...
State of Missouri
Single Audit
Corrective Action Plan
Year Ended June 30, 2023
State Agency: Department of Health and Senior Services
Audit Finding Number: 2023-013 CACFP Subrecipient Monitoring
Name of the contact person responsible for corrective action: Sarah Walker, Bureau Chief
Anticipated completion date for corrective action:
The agency does not agree with the audit findings or believes that corrective action is not required. Explanation and specific reasons are as follows:
A- Risk Assessments
DHSS disagrees with this recommendation because the risk assessment process performed by BCFNA is in compliance with the substance and spirit of federal regulations – both of the federal funding agency, USDA, and 2 CFR 200, Uniform Grant Guidance. BCFNA risk assessments consider relevant information and are used to determine the extent and timing of monitoring as set out in the Nutritionist Manual. The BCFNA risk-based monitoring approach already allows for monitoring subrecipients more frequently than required by USDA.
2 CFR 200.332 states pass-through entities are to evaluate each subrecipient's risk of noncompliance with Federal statutes, regulations, and the terms and conditions of the subaward for purposes of determining the appropriate subrecipient monitoring described in paragraphs (d) and (e) of this section, which may include consideration of such factors as:
(1) The subrecipient's prior experience with the same or similar subawards;
(2) The results of previous audits including whether or not the subrecipient receives a Single Audit in accordance with Subpart F of this part, and the extent to which the same or similar subaward has been audited as a major program;
(3) Whether the subrecipient has new personnel or new or substantially changed systems; and
(4) The extent and results of Federal awarding agency monitoring (e.g., if the subrecipient also receives Federal awards directly from a Federal awarding agency).
The BCFNA formal risk assessment process takes into consideration the results of current and previous experience with the same subaward (item 1 in the suggested criteria) as well as whether the subrecipient has new personnel or new or substantially changed systems (item 3 in the suggested criteria). These observations are made when performing onsite monitoring by Nutritionists who are familiar with the program, its requirements and its participants, and are trained in recognizing significant issues. BCFNA also takes into consideration the results of the subrecipient’s prior experience with similar subawards in other programs such as SFSP, NSLP and Child Care Licensing Reviews (item 1 in the suggested criteria), audit results (item 2 in the suggested criteria) as well as the results of Technical Assistance Reviews offered to new subrecipients which could move up the planned monitoring schedule.
B- Subrecipient Monitoring Procedures
DHSS disagrees with this recommendation. The State Auditor’s Office (SAO) states in this finding, “While our review found the sample monitoring reviews were performed in accordance with the policies and procedures outlined in the Internal Nutritionist Manual we identified areas where these policies and procedures could be strengthened and improved...” The SAO has not noted any specific noncompliance with federal requirements regarding subrecipient monitoring. The SAO’s finding noted the DHSS could enhance or improve it’s process but not that it is out of compliance with federal requirements for subrecipient monitoring. The SAO is trying to hold DHSS to a higher standard than what is federally required.
Throughout the SAO’s finding they repeatedly acknowledge that the BCFNA monitoring process is in compliance with Nutritionist Manual which is based on USDA requirements, but is somehow not in compliance with broader federal requirements. This is incongruent with the accepted hierarchy of federal compliance guidance which says that 2 CFR 200 Uniform Grant Guidance is broader and less specific than the higher-ranking requirements set forth by specific federal grant funders and awards.
In addition, the DHSS has a strong system of internal controls documented in the Nutritionist Manual which is in compliance with federal regulations and is used as a best practice by the USDA for other states. The report from the most recent USDA Management Evaluation Report for Fiscal Year 2023 issued November 2023 stated “The FNS determined that the SA Monitoring of Sponsors and SA Oversight of Sponsor Monitoring’s has adequate management controls in place for administering the CACFP in accordance with Federal regulations. The FNS staff reviewed SA practices that included detailed SA review forms, spreadsheets that provided extra oversight, and written procedures detailing the monitoring process. The SA provides online CACFP trainings along with a handbook to institutions that detail policies and procedures governed by the SA. The SA developed an extensive tracking system in addition to a very thorough review tool that contains meal component and pattern calculation. The SA conducts oversight of the review process and tracks each step to confirm completion of any follow up required of institution. The SA CACFP training resources and online modules were reviewed and evaluated to ensure it contained the correct information and up to date policies and procedures. The FNS staff reviewed the SA policies and procedures and interviewed key SA staff regarding procedures for each respective area of this Section. All files reviewed are compliant with Program requirements. The FY 2023 CACFP ME review did not identify any significant reportable issues.”
The DHSS through BCFNA has and will continue to review, strengthen and enforce subrecipient monitoring procedures in accordance with federal program requirements and management evaluation. BCFNA has and continues to exceed what is required by the federal awarding agency by implementing a risk-based monitoring plan that allows for more frequent onsite monitoring than required by the USDA. In addition, even though COVID waivers allowed for monitoring to be suspended during the COVID Public Health Emergency, the BCFNA continued to monitor through the use of desk reviews. BCFNA also returned to onsite monitoring months before it was required by the USDA. Furthermore, BCFNA has recently hired a financial manager to help identify red flags with new and returning sponsors and recently enhanced training and technical assistance opportunities based on issues found during monitoring.
Corrective Action Plans
Due to the size of the CACFP program it is imperative that a risk-based approach be used in performing monitoring and follow up activities. DHSS through BCFNA follows up and ensures that subrecipients take timely and appropriate action on all deficiencies detected through on-site reviews of the subrecipient using a risk-based approach approved by the USDA. Standard practices are in compliance with federal regulations. Physical verification or review of supporting documentation immediately at the time of submission to verify the CAP is not a federal requirement. Follow-up during the next scheduled review is in accordance with USDA regulations and BCFNA policy and procedure.
BCFNA reviews Corrective Action Plans (CAPs) submitted by subrecipients to ensure they are acceptable and correct noted issues. Supporting documentation of CAP implementation may be reviewed by BCFNA’s trained Nutritionist performing the monitoring reviews prior to the next monitoring visit if deemed necessary, or during the next onsite monitoring visit. This follow up is timely and appropriate because the scheduling of the next monitoring visit is determined by the USDA-approved risk-based approach. For example, subrecipients that had significantly deficient issues in their monitoring will be reviewed onsite within 90 days to verify whether corrective actions have been taken and if not, move towards termination. The corrective action plans of other subrecipients that were deemed to not be as significant by the Nutritionist, such as using the wrong percent of milk, are verified at the next monitoring review which could range from 1 to 3 years. The criteria used by the SAO do not specify what is timely or appropriate and allows for BCFNA’s professional judgement and discretion of what is timely and appropriate.
Claims testing
BCFNA standard practice is test only the selected month(s) claim(s) per USDA requirements, although when warranted, additional reviews are conducted beyond the test month. Actual noncompliance has not been noted in regards to testing. The BCFNA Nutritionist Manual allows for expanded testing if needed and BCFNA does perform expanded testing if deemed necessary. However, the USDA risk-based monitoring approach implemented by BCFNA sets prompt follow-up standards for significant deficiencies to determine if addressed, and if not, move on to termination.
Overclaim recoupment
BCFNA standard practice is to pursue recoupment of overclaims of only the test month per USDA requirements, although when warranted, additional reviews are conducted beyond the test month. In addition, BCFNA officials pursue recoupment of overclaims for facilities/sponsors with terminated contracts on a case-by-case basis, taking into consideration various factors.
BCFNA strives to maintain an appropriate balance between adequate monitoring and not creating barriers to program participation per USDA and the Paperwork Reduction Act. Starting the termination process is more effective than performing additional testing and pursuing historically unsuccessful recoupment of overclaims.
CACFP is an important program that provides healthy meals to children and adults. The CACFP plays a vital role in improving the quality of day care and making it more affordable for many low-income families. This entitlement program provides reimbursements for nutritious meals and snacks to organizations that serve eligible children and adults who are enrolled for care at participating child care centers, day care homes, emergency shelters and adult day care centers. CACFP processes an average of 700 claims per month and provided healthy meals in Missouri to over 31 million children and adults in 2023. USDA prohibits creating barriers to program participation and provision of services. The steps over and above the USDA requirements suggested by the SAO would place significant barriers to participation in the CACFP program and in turn cause harm to needy children and adults.
The USDA established an acceptable level of risk with respect to the CACFP program and provided approved risk management processes and requirements. DHSS disagrees with the methodology the SAO used in its calculations. Out of the SAO’s test sample of 60 monitoring reviews, only 9 of the overclaims were over the $600 threshold of acceptable risk set by the USDA. 7 CFR 226.8(f): In conducting management evaluations, reviews, or audits in a fiscal year, the State agency, FNS, or OIG may disregard an overpayment if the overpayment does not exceed $600. A State agency may establish, through State law, regulation or procedure, an alternate disregard threshold that does not exceed $600. The SAO left the inflated error percentage in the body of the finding despite repeated requests and only included the lower suggested rates in footnote 4. The SAO also did not explain how their test of monitoring reviews performed by BCFNA, instead of a sample of claims submitted, was representative of CACFP reimbursements that would lend to projecting to the total population. BCFNA monitors using a risk-based approach as required in response to known erroneous claims and to proactively address issues. A sample of monitoring reviews is proportionally more likely to include a higher number of claims with discrepancies.